Dáil Éireann Debate, Wednesday - 8 June 2016
47. Deputy Martin Kenny asked the Minister for Agriculture, Food and the Marine the consequences for Irish farming of the sale by a bank (details supplied) of €100 million of agricultural loans to vulture funds, thereby removing this land from the control of Irish farmers; if he has met the bank to discuss this situation; and if he will make a statement on the matter. [14833/16]
View answerPrimary responsibility for banking policy lies with the Department of Finance. Officials from that Department have been in contact with the bank in question with regard to the details of the loan sale. The Minister for Finance has stated that the sale of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract.
Active engagement by indebted borrowers with their lender is key to achieving a sustainable resolution, and I would urge borrowers in arrears who have not already done so to take that first step by contacting their lender directly or contacting the Money Advice and Budgeting Service, MABS, for an independent assessment of their situation and advice on available resolution options.
In regard to the consequences for agriculture, my predecessor, Deputy Coveney, wrote to the bank in early April to express his concerns. The bank replied that a low number of agricultural customers were potentially affected by the sale and that it has proactively engaged and worked with such customers. It also stated that any potential sale of non-performing SME loans would only be done after the completion of an extensive review of each customer's individual circumstances. The bank gave assurances that throughout this process it remains fully committed to supporting all of its customers, including those in the agriculture and food sectors.
In addition to this correspondence, my officials have been in contact with the bank in question on a regular basis with regard to sale of these loans. I will meet the CEO of the bank later this month and this issue will be one of the topics on the agenda.
I thank the Minister, and I congratulate him and the Minister of State on their appointments. This issue cuts across many of the things that affect people the length and breadth of rural Ireland. Many people are in significant debt, aside from those in the agricultural sector. A lot of this debt, which may put large amounts of farmland under the hammer and allow it to fall into the hands of vulture capitalists, was generated not on farms but elsewhere. Unfortunately, in many cases farms were put up as collateral and are now falling foul of such agreements.
While I welcome the Minister's proposal to meet the CEO of the bank concerned, I urge him, prior to the meeting, to write to the CEO and implore him not to proceed with any sale of land. Many of the people affected are seriously concerned that this agricultural land, which is valued at up to €100 million, will go out of the hands of people living in the State and be bought by vulture capitalists from other countries.
It is vital that the Minister take a hands-on approach. Agricultural land that belongs to the people of Ireland should remain in Ireland. Everything should be done to ensure that the land is kept in the hands of the people who currently own it. I call on the Minister to implore the bank to ensure that whatever can be done is done.
I thank Deputy Kenny for his good wishes and look forward to working with him during my time as Minister. As I said in my response, I have arranged a meeting on 29 June with the new CEO of the bank in question, Mr. Mallon. I will raise all of the issues that affect farmers, including credit and the sale of loans. It is not a question of the bank selling land; rather, it is selling distressed loans. I take the Deputy's point. In many respects, these bad debts arise from off-farm investments rather than investments involving matters inside farm gates. That is a specific issue which I will raise with the CEO.
As I mentioned in my response, the previous Minister was in contact with the bank in April. I have already been in contact with it and have arranged a meeting. Officials in my Department are in continuous contact. It is important to emphasise that the sale of loans does not have an adverse impact on the rights contained in the original contracts between borrowers and lenders. A critical factor to note is that the same protections exist legally for borrowers in respect of the sale of loans to third parties.
I thank the Minister. I am glad to hear that, but many farmers are concerned that when loans are sold to entities outside the State they may not come under the same control and regulation as pertains to banks registered in the State.
The Minister is quite correct that many loans were generated from off-farm activities. I am aware of a farmer who had some money in his local bank during the boom, when everything was going well. He was called in to meet the bank manager, who told the farmer that he should invest money in something. He said that the bank had a particular set of investments available, and it would top up the farmer's savings by lending him money. It was through the encouragement of the banks that people got into so much debt. The bubble burst and the gravy train that banks set up for people at the end of their retirement or whatever all went wrong. People were left with significant debts and they are now under a threat in that their loans may be sold to vulture funds. Naturally, most people are very fearful that such funds would have no compassion for farmers living in rural Ireland and would sell their property. Many such difficulties have arisen in a particular set of circumstances, in many cases where banks were the key players in creating the debt in the first place.
I am reminded of the words of Shakespeare, "Neither a borrower nor a lender be". Perhaps it would be good advice in respect of the parties involved. However, I take the point the Deputy raised. I do not think there is much difference between the approaches we take to the matter. My approach will be to assist, in so far as we practically can, farmers who are in that situation. We will impress on the financial institutions a requirement for forbearance. We do not know whomever the purchaser of the loans will be, whether it is a fund outside of the State or within it. The loan book has not yet been disposed of, but in the context of the overall loan sale there is a small proportion of vulture funds, and I accept that is a worrying development for any individual farmer who is in that situation. For that reason I wish to reassure those individual farmers that their legal entitlement in respect of the sale of those loans to a third party is not impacted in any adverse way and remains unchanged. As Minister for Agriculture, Food and the Marine I will work to try to ensure there is a satisfactory outcome through the forbearance we can extract from the bank involved.
