RABOBANK IRELAND, the IFSC-based operation of the Dutch banking group, reported a loss last year for the first time in its 13-year history, blaming the global liquidity crisis and credit crunch.
The bank, which operates in the areas of treasury dealing, structured finance, corporate lending and management services, made a pretax loss of €26.6 million in 2007, compared with a pretax profit of €39.3 million the previous year, according to accounts just filed. It reported a loss of €23.1 million, compared with a profit of €37.8 million the previous year. This reduced retained profits, which fell from €363.2 million to €340.1 million.
The bank said it incurred losses on the sale of some of its debt securities, and had taken a bad debt charge of €16 million in its 2007 financial statements on its remaining impaired debt securities.
"The banking market crisis did not have a significant impact on net interest margin, which remained consistent with prior year at €59 million, despite a reduced asset base," the directors of the bank said in their 2007 report.
The financial turmoil in the wholesale money markets has reduced the bank's asset base, as financial institutions have become reluctant to lend money to each other in the inter-banking market.
Assets fell by €2.8 billion, or 11 per cent, to €21.7 billion, due to the sale of debt securities and a reduction in inter-bank lending, the bank said.
Operating income fell sharply from €54.2 million to €4.3 million, as the Dublin company incurred losses of €46.9 million in 2007 selling financial assets, compared with gains of €4.5 million the previous year.
Net interest income increased 0.5 per cent from €58.7 million to €59 million, while operating expenses rose 6 per cent from €14.7 million to €15.6 million.
The bank's debt securities in issue dropped from €1.3 billion to €706 million in 2007, reflecting the reduced activity in the financial markets due to the liquidity and credit crisis.
The company's commercial paper in issue fell from €963.8 million to €401.9 million.
Rabobank Ireland's guarantees to make payments on behalf of clients rose from €95 million to €158.4 million, while its commitments to extend credit rose from €224.9 million to €231.5 million.
Almost 72 per cent of its assets are held with entities of the Dutch banking group, with the remainder comprising loans to business clients in Ireland and overseas, and a portfolio of investment bonds.
Some €6.8 billion, or 31 per cent of the operation's loan portfolio, relate to Irish loans. Banks and financial institutions accounted for 76 per cent of the bank's loans.
The IFSC operation, which employs 78 people, is part of the Dutch banking group's international corporate and investment banking arm. Staff costs fell from €9.7 million to €8.5 million.
The Dublin unit is separate from Rabodirect, the online European bank which launched a savings operation in Ireland in 2005, and ACC Bank, which the Dutch banking group acquired in 2002.
Rabobank Ireland's managing director Rob Hartog is also chief executive of ACC Bank. Fergus Murphy, who took over as chief executive of EBS Building Society in January, was a director of the IFSC operation from June to November of last year.
