Farm Ireland

Tuesday 23 January 2018

Farm leaders demand action on vulture funds

Thousands of landowners under threat from potential AIB 'bad loans' sale

Concern has been expressed about lack of regulation of vulture funds
Concern has been expressed about lack of regulation of vulture funds
ICMSA president John Comer

Claire McCormack

The potential sell-off by AIB of €1.8bn in bad loans has triggered fears among thousands of indebted farmers that their loans could be offloaded to a vulture fund.

Although the State-owned bank - bailed out with €21bn in taxpayer funding since 2008 - would not confirm or deny reports of a sell-off, farm organisations are preparing for the worst-case scenario.

A spokesperson for AIB said: "We keep all options under consideration. Our primary objective is to work with borrowers under stress to return their borrowings to a satisfactory position."

However, the IFA says it will be ramping up its campaign on the issue as pressure builds on the Government to regulate vulture funds which buy distressed or bad loans at knockdown prices from the banks.

"We are really concerned about the lack of regulation around vulture funds and the way they deal with the borrowers," said Martin Stapleton, IFA farm business committee chairman.

"When you fall behind, the lender is entitled to call in the loan immediately, and that's what is happening at vulture fund level where they are looking for a quick buck."

He said the IFA is "busier than ever" on the issue.

"We are discussing our options at the highest possible level. We really have to strengthen our hand here, strategies are not working."

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Matt Carey, a debt resolution advisor who represents many farmers, says thousands of farmers could be affected by the potential AIB sale of its bad loans.

"Nearly every farmer south of the midlands does some business with AIB. Numbers affected are going to be quite big, in the thousands," said Mr Carey, a former manager with ACC Bank.

"Bank debt in farming comes from investing in land and buildings that don't return payments.

"Farmers were also leveraging properties to buy apartments in Bulgaria and places, so there is a lot of bad debt out there with land held as security," added Mr Carey.

John Comer, ICMSA president, said: “As a state bank, AIB should be showing more patience and under-standing.

The collapse in milk price has led to financial difficulties and, possibly, a temporary inability to pay a farm loan. “It’s intolerable that farmers are being cast aside by banks they’ve dealt with for generations to face some outfit they know nothing about,” he said.

Seamus Sherlock, ICSA rural development chairman, said he would be “very disappointed” if the potential AIB sell-off goes ahead.

ICSA has been working on behalf of some of the estimated 200 farmers believed to be affected by the sell-off last October by Ulster Bank of a €2.5billion loan portfolio to the Cerberus fund.

Meanwhile, Mr Carey described the Government’s €150m low-cost loan scheme for livestock, tillage and horticulture farmers,launched in co-operation with the Strategic Banking Corporation of Ireland, as “a tidy up loan”.

“For farmers in financial difficulty already with accounts that confirm two bad income years there is a huge likelihood they will be refused. You can only get refinanced if you’re sustainable. The ones who need them [low interest loans] most probably won’t be able to avail of them,” he said.

The scheme will lend money to farmers at low-cost interest rates of 2.95pc and is available through AIB, Bank of Ireland and Ulster Bank.

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