Farming families are being “preyed upon” by so-called vulture funds who are “killing off farm businesses”, while small businesses are being intimidated into silence, according to bodies representing the sectors.
Irish Farmers’ Association (IFA) president Joe Healy said farmers’ trust in banks was lost as more and more of them “abdicated responsibility” by selling their loans to vulture funds.
Speaking alongside Mr Healy at the Oireachtas finance committee, the chief executive of Isme, Neil McDonnell, said a company currently going through a debt restructuring was intimidated into not appearing before TDs and senators.
I was to have been accompanied here today by a member company which is going through a debt restructuring, but it was made very clear to them that the offer being negotiated currently would not be honoured if the company appeared before you,” said Mr McDonnell.
Both organisations accused Irish lenders of taking the easy way out by selling loans to vulture funds, which they said had no incentive to assist the customer.
The financial adviser credited with helping expose the tracker mortgage crisis, Padraic Kissane, told the committee that vulture funds were motivated purely for profit.
It is an “enormous industry” benefiting from banks selling on loans at dramatically reduced prices, because the banks have little interest in engaging in solutions for customers, preferring to hide behind European Central Bank rules of reducing non-performing loans.
Mr Kissane said: “What is paid by these funds for the loans is the great mystery that no one seems to know. However, if you review the websites of the main players in the Irish market, the answers are clear. They are queuing up to come here.”
Vulture funds linked to Goldman Sachs made €456m in distressed Irish loans last year alone, Mr Kissane said.
The facts are there,” he said. “They are not here for any benefit of the customer.
IFA farm business chairman Martin Stapleton said vulture funds had to be made accountable.
There must be enforcement by the Financial Regulator, including information on loan owners, the number of loans they own, and the profile of borrowers — while there had to be options to engage with the vulture fund and not through intermediaries, Mr Stapleton said.
“Borrowers must have the option to engage directly with the loan owners, and not only through third-party agencies,” he said. “The current system of employing asset managers as intermediaries is a failure, as funds are instructing the asset managers to recover par debt plus costs as a sole option. There must be accountability to the Minister for Finance and to the Houses of the Oireachtas.”