ACCBank is putting a brave face on its £17.9 million settlement with the Revenue Commissioners, insisting it is now free to move ahead with its new business plan. But for all the bravado, it has had to dig deep into its own reserves to write that cheque and will find it much harder to grow its business as a result.

The DIRT settlement will effectively wipe out a full year's profits at the already struggling bank. Figures showing losses of £9.3 million in the six months also highlight concerns about the quality of part of its loan book and suggest its management team have an unenviable task on their hands.

Chief executive Mr Colm Darling says he is hopeful this loss can be reduced to between £2 million and £3 million by year-end, but he stresses those figures carry a health warning. This year's results will reflect the full impact of the DIRT settlement, possibly higher bad debt provisions and an as yet undisclosed restructuring cost which will also be absorbed in the current year.

Bad debt provisions increased from £700,000 in 1999 to £3.6 million this year following a review of ACC's corporate loan book, a review which is still continuing. Mr Darling says the provision relates to a number of loans outside of the agricultural sector. Part of this provision is understood to relate to borrowings sanctioned for the development of the Four Seasons Hotel in Ballsbridge, which has run substantially over budget. The bank's former chairman, Mr Dan McGing, is a director of a company linked to the development of the hotel.

The bank is keen to emphasise the merits of its new business strategy, which involves repositioning ACC largely towards the business market.

A restructuring plan, which includes the loss of 200 of its 625 staff, branch closures and a withdrawal from highly competitive areas of business such as mortgages and current accounts, has been sanctioned by the Minister for Finance, Mr McCreevy, to make ACC an attractive takeover target.

ACC is hoping to deal with all of the bad news this year, according to Mr Darling. "We want to ensure that if someone undertakes due diligence, there will be no surprises," he says. With the DIRT issue resolved, he suggests the first part of the sale process has been put in place - but in reality a sale must be a long way off.