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Friday 16 November 2018

'There is a huge amount of farmers worried about vulture funds' committee hears amid calls to regulate ‘cowboy’ receivers

Calls to halt AIB sale of non-performing loans

IFA president Joe Healy (left) and Martin Stapleton, IFA farm business chairman. Photo: Karen Morgan
IFA president Joe Healy (left) and Martin Stapleton, IFA farm business chairman. Photo: Karen Morgan

Gavin McLoughlin & Margaret Donnelly

There is a huge number of farmers and farm families worried about vulture funds and the impact on their loans, a Joint Oireachtas Committee on the sale of loans to unregulated private investment funds heard today. It also heard calls for greater regulation of receivers, some of whom are going around the country like ‘cowboys’.

The Irish Farmers' Association (IFA) Director General Damian McDonald told the hearing that a lot of farm families are "suffering in silence with their situations. That is a factor in matters like this and it makes it harder to get a grip on how big a problem this is."

The IFA, he said, is actively involved in 150 cases of farmer loans being sold off by banks to vulture funds, but he said that the number of farm families affected by the situation is probably far greater.

"You have to think there is a huge number of people who are worried about this and are not sure where they are going to end up. It is a concern as well that farmers when they eventually come to us it’s too late and they are afraid that if the case becomes high profile the fund will be harder on them.

"Based on the reaction we would be very worried there are a lot of farmers out there in trouble."

Chair of the Oireachtas Finance Committee John McGuinness called on those present at the hearing to join the campaign to stop vultures.

"In the name of Ireland please join in the campaign to stop these vultures. The political system has the capacity to deal with it, but they refuse to," he said.

He also said that the upcoming AIB sale of non-performing loans must be stopped.

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"This sale from AIB that’s coming forward - the Government must stop this AIB sale going ahead." He also said that greater regulation was needed of receivers, some of who were "going around the country like cowboys" as they do their work.

Neil McDonnell told the Oireachtas Finance Committee that a company negotiating with a vulture fund was told the offer under discussion would not be made if the company appeared before an Oireachtas Committee, according to the head of the Irish Small and Medium Enterprises Association (ISME).

“I was to have been accompanied here by a member company which is going through a debt restructure, but it was made very clear to them that the offer being negotiated currently would not be offered if the company appeared before you,” Mr McDonnell claimed.

The committee was meeting with representatives from the farming and small business communities to discuss the issue of loans being purchased from banks by vulture funds.

IFA President Joe Healy told the hearing that it's unknown exactly how many farms are within loan books that have been bought by vulture funds.

"Farmers borrowed money from established and reputable banks in good faith. These institutions have sold farm debt to third parties who take a short term approach, they are not interested in working out a long term debt collection."

He said that quite often, the sales of assets damage the viability of farms but vulture funds see these as a very high recovery potential.

He also said that in other sectors businesses are allowed to restructure debt, but there had been a loss of confidence in banks among the farming community.

He said that where the family farm is in agreement to commit to reasonable payment in line with capacity of the farm it should mean no forced sale of assets that will undermine the viability of the farm.

IFA Farm Business Chairman Martin Stapleton said that vulture funds are not interested in long term restructuring and the IFA does not get "real engagement".

"We don’t get real engagement. The meetings are not worth the time we spend. Its always focused on the max poss recovery in the shortest possible time. The fund is making the decision but we have no direct engagement with the fund on an individual basis."

The hearing also heard that local branch managers who have known these farm families for years, the responsibility and discretion they had to make arrangements with such clients is gone. It’s now all thrown to ‘head office’ and that’s a huge issue, according to Padraic Kissane.

Martin Stapleton said that he's had local branch managers of pillar banks tell me that commitments they’ve made to the borrowers have been reneged on by their superiors.

"We want protection for the borrower, where someone can go back and ask for a sustainable loan to be put in place in accordance with the repayment capacity of the farm so people can work through their debt."

He also called for personal insolvency legislation be adapted for farms.

Fianna Fail's John McGuinness told the hearing that people were afraid to come before the committee today. "The Government must step in an do something about it."

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