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.