Farmers need to be offered lower bank loan rates – Cullinan

Farmers need to be offered lower interest rates on loans, as agriculture kept the country going during several lockdowns as a result of the Covid-19 pandemic.

The message comes from the president of the Irish Farmers’ Association (IFA), Tim Cullinan, following confirmation by Ulster Bank today (Friday, February 19) that it will withdraw from the Republic of Ireland over the next few years.

Also Read: Call for Ulster Bank loan books to go to ‘pillar’ banks

Ulster Bank Ltd’s banking business in Northern Ireland is unaffected.

Sale of loan portfolio

Speaking to AgriLand as news broke of Ulster Bank confirming its withdrawal, Tim Cullinan said: We are concerned; we had three main functioning banks up until now in Ireland.

“Ulster Bank has been servicing farmers for many years and looking at it, we have approximately 10,000 farmers that would have long-term loans with that bank and probably another 10,000 that would be trading with a current account.

“What I’m saying to farmers [today], and I’m saying to Ulster Bank and I’m saying to the government, is we have to ensure that those loans and working accounts go to another functional bank.

We do not want a scenario here were we see these loans being sold off to ‘vulture’ funds as we have seen in other situations in the past.

“As we know, a lot of money has been invested by farmers, particularly in the dairy sector since the abolition of quotas,” Cullinan added.

The IFA president said that over €2 billion has been invested by farmers through scheduled loans over a 10 to 15-year period, adding that the association wants to ensure that those loans go to a “proper functional bank” and farmers can continue with their businesses.

Lower interest rates

Cullinan added that the IFA believes the government needs to ensure a low-interest rate for farmers who have borrowed as well.

“We see at the moment, money on the markets is trading at zero and we want low rates for farmers as well,” he told AgriLand.

“We’re looking at an essential business that has continued to function right throughout Covid-19, when a lot of people are not working and a lot of businesses are closed down; agriculture is one of the sectors that has continued to work.

The minister [for Finance, Paschal Donohoe] and his government are part-owners of one of the major banks within the country, so I don’t take this from the government that they can’t intervene here – of course they can.

“They [government] have to ensure that people that have taken out loans and have been working with Ulster Bank over the years… that they are protected. I think that is the duty of the Minister for Finance to ensure that happens,” Cullinan added.

Local bank branches

The IFA has reiterated its call that Ulster Bank’s loan books be sold to other banks which have a local presence.

We have seen quite a lot of that since the recession; that farmers are meeting ‘faceless’ banks, but we do not want that trend to continue.

“We have a number of functional banks and what I want to see happening here and the government needs to ensure this, is that those loans and working accounts go to banks that are not ‘faceless’ and that farmers can sit down across the table from people within these institutions and be able to discuss and work out their business arrangements.

“Farmers need to be able to do that. We do not want a situation where they are going to ‘faceless’ businesses and farmers cannot interact with people on the other side of the table,” he concluded.

Ulster Bank withdrawal

Ulster Bank has said it will withdraw from the Republic of Ireland in an “orderly and considered manner”.

Ulster Bank chief executive officer (CEO), Jane Howard said:

“The decision by NatWest to withdraw from this market is hugely disappointing and today will be a difficult and worrying time for our colleagues across the bank. It may also lead to customer questions and concerns as to how this decision may impact them and their day-to-day banking needs.

I want to be clear that there will be no change for customers today; changes will happen over the coming years.

“Customers do not need to take any action as a consequence of this announcement. We will communicate with customers in a timely manner over the coming weeks and months.

“We will now consult with employee representative bodies to determine how best to plan and manage an orderly withdrawal of the bank over the coming years. There will be no new compulsory departures from the bank this year,” she concluded.