Farm Ireland
Independent.ie

Friday 21 July 2017

Vulture funds closing in on hundreds of farms

'There will be blood on the floor in 2017,' warns farm finance expert

Mortgage debt experts are calling on farm organisations to ramp up efforts to protect those affected, most of whom have been in financial difficulty since the economic crash.
Mortgage debt experts are calling on farm organisations to ramp up efforts to protect those affected, most of whom have been in financial difficulty since the economic crash.

Hundreds of farms face repossession this year as so-called vulture funds swoop on indebted properties, agri-finance experts have warned.

Industry sources say that as many as 200 farmers may be affected by the sale of a €2.5bn Ulster Bank loan portfolio to US vulture fund Cerberus last October. Hundreds more could also come under pressure if the anticipated sale of other Irish mortgage portfolios to global funds goes ahead.

Mortgage debt experts are calling on farm organisations to ramp up efforts to protect those affected, most of whom have been in financial difficulty since the economic crash.

The IFA and the ICMSA have called on banks to "engage constructively" with farmers and to offer realistic restructuring options.

Matt Carey, a debt resolution advisor who represents many farmers, said the Ulster Bank portfolio to Cerberus is causing "severe anxiety" for many of his clients.

"They do not know how to deal with a vulture fund. There is huge anxiety out there, while Ulster Bank walk away pretty happy."

David Hall
David Hall

The vulture funds' primary interest is in the assets, not the debt, said Mr Carey. "They are attracted to the agricultural property and lands that secure debts."

Mr Carey, a former bank manager who worked at the former ACC bank for 37 years, said farmers are now struggling to get loans from other banks to pay back to the hedge funds.


"They have very few options, Bank of Ireland and Allied Irish Bank essentially aren't understanding at all that farmers are finding it very difficult," he said.

"It is tolerable now that if you fail to pay, you lose. Unless the pressure comes from somewhere like the IFA and the other farm organisations to help these people, there will be a free run for the vulture funds. In other words, there will be blood on the floor in 2017."

He said the only way some debts will be repaid is by repossession and sale.

David Hall, CEO of the Irish Mortgage Holders Organisation (IMHO) revealed that his company is exploring options for indebted farmers with a national bank.

"This year we are going to see a very significant increase in vulture fund activity against everybody, including farmers," he said.

"It is a very unemotional transaction. These guys have ice in their veins, this is a raw commercial gig," he said.

Mr Hall also claims that banks are also failing to address the issue.

"We're exploring options that would allow us to do what has been done successfully with homeowners. We want to set up a system with specialist advisors with a knowledge of farmers, and we have explored the option of a mobile desk clinic in a van that could be accessible in farming communities where we would go to them," he said.

IFA president Joe Healy said: "IFA is very clear, as part of our ongoing engagements with both the banks and agencies dealing with distressed loans, we will not tolerate the stripping of assets with no regard for the family farm."

ICMSA president John Comer said: "Farmers are, by nature, conservative and cautious in their approach to borrowing and huge stress would be laid upon the relationship with 'their' bank. The idea that their business arrangements could be 'bundled up' and sold to some anonymous offshore outfit who bluntly care only about 'sweating their asset' is one that most farmers will find deeply alarming."

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