Banks abandon small business and farmers to vulture funds
VIABLE farms and business are being left at risk of seizure from vulture funds because the main banks no longer develop real relationships with their borrowers, the State’s credit watchdog has warned.
The call to protect business borrowers came as the Central Bank said it would challenge what it called “evil nudges” from banks – a reference to advertising and communication subtly encouraging consumers to take out products not in their best interests.
It is part of the response to the €1bn tracker mortgage scandal, which saw tens of thousands of ordinary borrowers lose out on the best deals and instead were stuck with brutally high mortgage interest bills.
Banks’ approach to small businesses and farms is now dominated by “numbers, ratios and credit bureau history,” said John Trethowan, the head of the Credit Review Office, yesterday.
The experienced banker was picked to set up the Credit Review Office after the crash to make sure rescued banks used their bailouts to keep credit flowing.
He has now warned that branch closures and desk-based decision making means “minimal reliance is placed on the borrower’s track record”.
Even viable small businesses were struggling to refinance loans away from funds that bought the debt, and were getting harder to deal with, he said.
“The feedback we have got over the last few months is that some of the funds are getting harder to deal with.