Farmers moving loans away from vulture funda
How farmers can move loans away from vulture funds has been highlighted by Ifac, the financial advisory and accounting co-op that works with many farmers and agri-businesses.
Ifac have been dealing directly with all “high street” banks in helping clients to refinance, restructure, and move loans from the vulture funds, says the company’s Head of Farm Support, Philip O’Connor.
He said, “Vulture funds are not viewed in a positive light by the vast majority of the farming sector.
“The perception is often that something went wrong with the borrowings, or that it was somehow the borrower’s fault that the debts have been sold to such a fund, massive negative equity, arrears, security issues etc.
“However, it is more often the case that it is far from being the borrower’s fault that a debt was moved to a vulture fund.”
“The reality is a lot of farmers had perfectly good performing loans with high street banks, their loan performing exactly as per the stipulated terms and conditions.
“For various reasons, said banks have now left the IrishmMarket or reduced their loan books, selling high-quality performing loans to vulture funds in the process.
“Some farmers are finding themselves dealing with a vulture fund with no building or office to visit, and zero boots on the ground.”
“Technically, this in itself shouldn’t be a problem, as long as the farmer repays the loan, there will or should be zero issues.
“Problems arise with these loans if the farmer wishes to restructure, refinance or use the security on another loan.
“In order to make any changes to these loans, the farmer will have to refinance with a “high street” or pillar bank, which unfortunately may result in a higher interest rate. This is not an attractive option for a farmer.”
“Recently, “high street” or pillar banks have been offering a way out of this problem for farmers.
“They are willing to refinance the debt at the same terms and conditions as the original loan. This will give the farmer more options into the future if they wish to restructure, refinance or use the security on another loan.
“In addition, the farmer will have the certainty of dealing with a bank that’s on the high street and regulated by the Central Bank of Ireland.”
“It is our experience in Ifac that in order to move a loan out of a vulture fund standard banking principles still apply.
“Farmers must have a good credit rating, security and repayment capacity, in order to either apply for new finance or move a loan to another bank.”
