Banks shutting farmers out from small loan deals

The IFA stage a protest outside the Allied Irish Bank's AIB AGM which was taking place in the Ballsbridge Hotel. Picture: Finbarr O'Rourke.
The IFA stage a protest outside the Allied Irish Bank's AIB AGM which was taking place in the Ballsbridge Hotel. Picture: Finbarr O'Rourke.
IFA's farm business chairman Martin Stapleton

Martin Ryan

Some banks are giving preferential treatment on farm loans to the largest borrowers, the IFA has claimed.

Chairman of the IFA farm business committee Martin Stapleton told the Farming Independent that while there is plenty of competition between lenders for farmers looking to borrow sums in the region of €500,000, anyone looking to borrow €50,000 will find it difficult to get a good interest rate.

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"If you are borrowing €400,000-€500,000 there is plenty of competition for the business and they (lending institutions) are prepared to negotiate on the terms.

"But anyone borrowing €50,000 will find it difficult to get a good interest rate and would be better going to their credit union," said Mr Stapleton who has been appointed to the newly formed Irish Banking Culture Board (IBCB)

Another banking source agreed with Mr Stapleton, saying "the administration (paper) work is just the same for €0.5m as it is for €50k, and it is more efficient to deal with one client than 10 because that is the way that some institutions look at it, and the risks may be less".

However, Pat Byrnes from Bank of Ireland stressed that farmers borrowing €20,000-€50,000 are not disadvantaged.

"We welcome these customers (and) loans of up to €120,000 available without security for suitable clients."

Mr Byrnes, BoI agricultural development manager (Munster), said that borrowings year to date are up on 2018 within the dairy sector "and we have strong demand from livestock farmers for stocking loans".

Vulture funds

Meanwhile, Mr Stapleton also warned that "the pillar banks are going to have to change if they are to regain the confidence of farmers.

"I don't take any pleasure in saying that AIB has not done what they should have done in protecting their farmers when they recently sold their loans to a vulture fund" he said.

"Farm families that had a right to expect that their bank would back them through their difficulties have been put through extreme hardship at their most difficult time.

"This is not acceptable and the position of AIB as one of the pillar banks lending to farmers has to be in doubt when they are taking actions like this," he said.

"They regularly tell us that they are only selling loans where people are not engaging but that is not the case.

"They sold the loans and walked away from people with good farms that were entitled to expect better from them," he said.

AIB agricultural division was contacted for a response but did not respond.

Indo Farming