Bank fraud payout could hit €200m

ACC Bank could face a payout of up to €200m if allegations of fraud and mis-selling are upheld in a High Court action, to be heard over a scheduled six-week trial starting tomorrow in the Four Courts.

The issues at the centre of the trial mean it has the capacity to be one of the biggest multi-action lawsuits ever brought before the Irish courts, with the potential for a massive payout to litigants, huge legal fees and other costs for the bank.

It is understood the potential fallout from the trial is causing grave concern at the headquarters of ACC Bank’s owners Rabobank Group in The Netherlands.

As many as 1,400 investors could be due compensation for mis-selling and fraud if the action, which initially involves only a small number of investors, is successful.

The claims centre on the sale to investors of ACC Bank’s Solid World Bond series between 2003 and 2005.

The vast bulk of the money invested in the Solid World Bonds was borrowed by clients from ACC Bank, with the average investor placing €428,000 in bonds.

One individual is understood to have invested close to €11m in Solid World Bonds, which had six separate series.

A total of €600m was invested in the Solid World Bond series, which in the main targeted the geared tracker bond at Irish investors.

Investors in the Solid World Bond series, where invested capital was guaranteed, were initially angered by the fact that returns did not even cover bank commission fees and the interest due on the funds initially borrowed from ACC Bank to invest in the scheme.

It is also understood that a number of investors have made complaints to the Financial Services Ombudsman and that these have not been upheld by the ombudsman.

Dublin-based legal firm Lavelle Coleman is representing a large tranche of the investors suing ACC Bank.