Banks calm foreclosure furore

12 Dec, 2014 02:05 PM
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26
 
It is our primary objective to help maintain their viability and keep them on the land

LEADING farm sector lenders National Australia Bank (NAB) and Rabobank have attempted to allay concerns about the extent of bank foreclosures on drought-stressed primary producers.

NAB, Australia's largest agribusiness bank, said it had almost 30,000 agribusiness customers and had foreclosed on just seven in drought-ravaged Queensland and North West NSW in the past year.

"We currently have no plans to foreclose on any of our drought affected customers in Queensland and North West NSW," a bank spokesman said.

"Foreclosure is a last resort and happens in very rare cases."

Rabobank's Australian country banking group executive, Peter Knoblanche said the vast majority of that bank's clients were managing "extremely well in the challenging drought conditions".

"Rabobank has an extremely small number of problem loans in these drought-affected regions," he said.

"Less than 0.2 per cent of our loan portfolio in these areas is subject to current receivership action, with only one instance in the pastoral industry."

Yesterday the Australia and New Zealand (ANZ) Banking Group promised a 12-month moratorium on farm repossessions in drought-stressed northern and western Queensland and North West NSW.

ANZ also announced a new support package for farmers impacted by drought including a 12-month commitment not to lift interest rates on distressed farms and special interest rate relief for producers in certain drought areas.

Its moratorium on foreclosures followed warnings to financial institutions from federal Agriculture Minister Barnaby Joyce who has said government intervention may be necessary to force the banks to be more fair, decent and patient with rural landholders.

Mr Joyce has since congratulated the ANZ on its move, saying it had responded the "well-held concerns".

"We much prefer the banks to manage their own situation rather than the government having to intervene," he said.

Federal Member for Hume Angus Taylor also welcomed the ANZ's drought support package, calling on the big lender's major rivals to match its assistance and commit to further measures.

"A 12-month moratorium on farm repossessions is a strong helping hand for landowners impacted by drought," he said.

"Further commitments by the ANZ, including freezing interest rates for 12 months, relocation assistance and more funding for rural counsellors are welcome initiatives, too. I commend the ANZ for its leadership."

Mr Taylor echoed the bank's Australian chief executive officer Philip Chronican's comments about parts of Queensland and NSW being in a drought spiral "not seen for a generation".

However, NAB noted foreclosures only occurred after "lengthy periods of consideration and evaluation which included extensive farm debt mediation, and the exhaustion of all other options".

Rabobank's Mr Knoblanche said drought support measures announced by his Netherlands-based institution in February remained in place and were working well.

"As a bank specialising in the agricultural sector and used to dealing with conditions like this around the world, Rabobank has very good practices in place to support our clients whose businesses are drought-affected," he said.

"These are fair, compassionate and tolerant, and have been very effective in assisting clients manage through these difficulties."

They included individual agreements reached with viable clients to hold off taking action for agreed periods, which allowed troubled clients to work through financial difficulties and "re-build their financial position when seasonal conditions improve".

"With any client who is experiencing financial difficulty, it is our primary objective to help maintain their viability and keep them on the land," Mr Knoblanche said.

"Any action taken is always on the basis of long-term viability, never on the basis of drought alone."

He said additional assistance measures for drought-impacted clients included "carry on" finance to keep viable operations running; waiving break costs on early redemption of farm management deposits to allow access to needed funds, loan payments deferrals and waiving fees on on loan increases to pay for rebuilding operations or equipment finance variations.

Meanwhile, NAB has noted its confidence in the long-term fundamentals of the farm sector with the lower dollar and the nation's enhanced trade position following recently announced free trade agreements.

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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READER COMMENTS

Bushfire Blonde
12/12/2014 3:35:40 PM

Congratulations to Federal MP Bob Katter, his son and State MP Robbie, 2GB's Alan Jones, David & Heather Pascoe and Facebook's Social Media for their efforts in bringing this argument to where it is at the moment - the Banks being forced into a moratorium on Foreclosures for 12 months (if they all fall into line) is a great step forward. Where is Agforce and the National Party MPs (except for Barnaby) in this this picture - exactly nowhere to be seen. What tripe have you got to say about this Bush Basher Bill?
Qlander
15/12/2014 11:31:17 AM

I might be getting super cynical in my old age, but 2 points. 1 It's hard to sell an rural property in a drought - the foreclosures and sales will begin in earnest after the drought has broken. 2 People who are still desperate and dependent are easy to keep quiet. People who have nothing left to lose are almost impossible to silence.
Rob Moore
15/12/2014 12:50:31 PM

True Q'lder- the bank sidestep is just a tournique. We need the PPP trading rule to be the open heart rebore that is needed to give us the strength and confidence to rebuild so that on any market in any year we can be assured of fair and open competition for our goods. Is this such a big ask? The 2.5M facebook supporters certainly don't think so.
keith
16/12/2014 6:19:47 AM

Rob. Which facebook page has the 2.5M supporters?
Rob Moore
16/12/2014 9:20:48 AM

Kieth- the vet-Dr David Pascoe who wrote the letter highlighting Charlie Phillcots demise promoted by Alan Jones. Started @ the Katter's meeting in Winton- last week. It was the facebook - bad press that caused the bank side step- NOTHING else. It was a very significant "chain of events" and the main stream media ought to take note! A lot of us are almost on a war footing in our third world disaster zone!
Old mate
16/12/2014 9:56:01 AM

Rob - A Facebook post made banks change policy? Not months and months of hard work and political pressure by others, rather than the Pascoes and Mr Jones jumping up and down at the last minute? Remind me to start my own hyped FB page next time I want to change society.
Qlander
16/12/2014 10:32:42 AM

Old mate: Unfortunately that's how thing are. An over hyped FB page and 30 minutes of bad press, can spook a Government into destroying an industry.
Keith
16/12/2014 10:47:26 AM

Rob. It's definitely not a nice situation for anyone to be in. But a moratorium of receivership sales for the whole banking sector will only makes things worse than they are now, by causing a bottleneck at the end of the term. And will ANZ remain in the agribusiness market if they're made to carry impaired loans for an extended period of time?? Everyone wants competition and yet we may well lose a big competitor in the market!! Everyone loves to bash banks but they forget about the good they do as well, like funding a property purchase for you and allow you to pay it back over time!!
hayseed
16/12/2014 10:52:01 AM

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ I'll second what "Old mate' said.....
Rob Moore
16/12/2014 2:59:46 PM

Well you will have to do better than "old mate". Anonymous fringe dwellers scared of their own name can't help anyone. Of course there were many players(Hughes,Atkinson) but the ceo's just laugh at us until we can get to the masses that flood their own public pages. They are not so cocky when they think that their shareholders are on the warparth.I take it that you think Jones and Pascoe(jumping) is just a stunt......you sound like a govt official /public servant who has been dragging their feet looking the other way in denial!
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