The board of ACC Bank is expected to approve sweeping changes at the bank which could include branch closures, a withdrawal from the expensive current account business and the scaling down of its presence in the mortgage market. The restructuring plan, which will be presented to the board next month, is also expected to involve redundancies at the State-owned bank.
Its senior management team is currently finalising a review of the bank's entire operations following the collapse of its planned merger with TSB Bank last month. The Minister for Finance, Mr McCreevy, instructed ACC and TSB to review their positions urgently and prepare themselves for sale. Analysts suggest this will require serious cost-cutting, with the primary focus likely to be on reducing labour costs.
ACC's newly appointed chief executive, Mr Colm Darling, told The Irish Times that no formal decisions have been taken on the bank's future strategy. "There are a number of issues which must be examined. Our focus is on achieving greater efficiencies and reducing costs," he said yesterday.
Some sources have speculated that the bank could seek to close up to 20 branches. Mr Darling rejected this suggestion, however, saying it was too early to talk about branch closures. But he stated the operation of the branch network was being examined, together with all other aspects of the bank's business.
"We are forming a view as to where to position the bank to put it in the strongest position in the market. We are looking at where we achieve the strongest performance and examining how we can capitalise on that. There are also issues to be considered in areas which are less profitable for the bank and will demand that we look at new ways of delivering these products." Mr Darling said much of the changes will be driven by customer needs. Meanwhile, earlier this week one of the bank's senior managers applied for a High Court injunction against ACC. He is contesting management changes within the bank. The bank refused to comment on the matter, which is still before the court.
The board, which is chaired by Mr Padraic O'Connor, will have to approve whatever changes are to be implemented and has indicated it is anxious to move quickly to adopt measures which will put the bank on a more commercial footing.
Morale at the bank is extremely low in the wake of the collapse of the proposed link-up with TSB. Both banks were due to merge and seek a stock market listing in May. If the flotation had gone ahead, ACC's 600 staff would have shared in the proceeds, valued at around £40,000 (€51,000) each under the Employee Share Option Programme.
Unions representing the bank's staff are now preparing for redundancies, although there are no estimates of the scale of any job losses.
The bank is still being audited by the Revenue as part of the look-back exercise throughout the Irish financial services sector to establish tax liabilities arising out of Public Accounts Committee inquiry into bogus non-resident accounts. ACC's DIRT liabilities could be very substantial. It is estimated to have potential tax arrears which amount to anything from £1.5 million to £17.5 million. These figures do not include penalties or interest, which will also apply.
