How you can put the squeeze on the bank
We'd all love to be able to do a Charlie Haughey on the bank and tell them where to get off. But assuming none of us are likely to be future taoisigh, we will need to rely instead on a different set of tactics to extract the best deals from our banks.
Some buyer groups have secured excellent deals that allow them to borrow at rates lower than 2pc over the cost of funds. That's an all-in interest rate of 3pc. But it doesn't happen by accident. Here's the 10 steps your group needs to take.
1. Stay homogenous
The more in common the members of your group have, the easier it is for a bank to assess what your requirements are. If you are all dairy suppliers, the bank knows that there's guaranteed monthly cash-flow, and that stocks consist of cows and feed. Grain men will have a different overdraft requirement and stocks will vary depending on the time of year.
2. Get buy-in from members
This is an all or nothing scenario. It's no good telling a bank that your group does a certain amount of business and turning around after they've made you an offer to inform them that only half of the members are going to go with it. The deal will also fail if some members only bring some of their business to the deal. This has big implications. What if one individual reneges? The group will need to agree in advance that it agrees to cancel membership if somebody doesn't toe the line.
3. Appoint an outsider
Get an outsider to take all the details of the group. This is a bigger task than it sounds. It'll need to be somebody familiar with farm finance - it could be an accountant or an agri-advisor. But groups with experience in this area have found that individuals with expertise in banking more so than farming are best positioned to leverage a deal when it comes to the crunch. Confidentially is a big issue here but again this is where total buy-in and planning is required. Normally, members agree that none of their details will be accessed by any other member so that the coordinator is the only person with access to individuals' details.