Farm Ireland

Tuesday 20 February 2018

Central Bank intervenes on vulture funds

ICMSA lobbies top bankers on plight of indebted farmers

The Central Bank headquarters in Dublin
The Central Bank headquarters in Dublin
Claire Mc Cormack

Claire Mc Cormack

Restrictions on the manner in which vulture funds deal with borrowers may be in the pipeline following a meeting between ICMSA and the Central Bank last week.

ICMSA pressed the Central Bank to issue a 'guidance document' for farmers whose loans have been acquired by so-called vulture funds.

While the Central Bank did not directly accede to the request, officials outlined the "various protections and Central Bank codes" that are in place to protect borrowers, including farmers, whose loans have been sold to third parties.

The bank said it had "committed to providing further information to the ICMSA" to help inform their members of the various protections available to borrowers.

Recent reports that AIB is considering selling off €1.8bn in non-performing loans, including farm loans, to vulture funds remains a major concern for farmers. Although the State-owned bank - bailed out with €21bn in taxpayer funding since 2008 - has not confirmed or denied this move, such an announcement is feared in advance of the bank's privatisation later this year.

It's understood a US vulture fund, Cerberus, is a potential buyer.

Ulster Bank sold 900 owner-occupier mortgages, on the brink of repossession, to the same investment firm last October.

ICMSA requested the meeting with the Central Bank to raise what it described as "deep concern" felt by farmers regarding vulture funds.

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While accepting the limitations of a guidance document, ICMSA president John Comer said the adoption of such a position by the Central Bank would be significant.

"Farmers need to know their rights in this regard, and the ICMSA proposal for a specific guidance document for farmers in setting out their rights in relation to dealing with vulture funds is important, and we're confident the Central Bank will implement this ­proposal," said Mr Comer.

The ICMSA president said the transfer of loans had provoked "huge disquiet" among farmers as the specialist finance companies who took over farm borrowings were generally operated on a business model that was "radically different to that used by traditional banking".

"Farmers feel traditional banks want and understand farm business and have a vested interest in a farmer working through a distressed loan.

"That is not the situation with 'vulture funds' who seem to operate on the basis that the sooner they can finalise a loan the better," he added.

Meanwhile, the IFA says it will be ramping up its campaign on the ­vulture funds issue over the coming weeks. Martin Stapleton, IFA farm ­business committee chairman, said: "We have written to the Finance Minister ­looking for regulation on vulture funds and before the end of the month we will be publishing our principles on how we intend to deal with them."

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