ANZ halts farm repossessions

11 Dec, 2014 03:00 PM
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15
 
Every time these farmers put their hands in their pockets, they find their bankers' fingers there

THE Australia and New Zealand (ANZ) Banking Group has promised a 12-month moratorium on farm repossessions in drought-stressed northern and western Queensland and North West NSW, while two rural politicians have accused the banking industry of acting like "bastards" on the farm debt issue.

The ANZ bank has also announced a new support package for farmers impacted by drought including a 12-month commitment not to lift interest rates on distressed farms.

It will also offer interest rate relief in cases of extreme distress as well as financial assistance to support farmers choosing to relocate off the land.

It will also provide increased funding to support rural counselling in towns and districts hardest hit by drought.

“We are acutely aware of the impact this is having on farmers”

Chief executive officer for ANZ Australia, Philip Chronican acknowledged parts of Queensland and northern NSW were experiencing some of the worst conditions in a generation. "We are acutely aware of the impact this is having on farmers, their families and on farming communities," he said.

The bank's decision comes just as Queensland Nationals Senator Barry O'Sullivan has begun promoting a Private Senator's Bill which aims to stop major rural lenders from enforcing penalty interest rates and foreclosing on drought impacted farmers.

Warnings to financial institutions have also come from federal Agriculture Minister Barnaby Joyce that government intervention may be necessary to force the banks to be more fair, decent and patient with rural landholders.

Mr Joyce congratulated the ANZ on the 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.

"And these are precisely the actions that show how a bank has the capacity to assist in these difficult times."

Senator O'Sullivan said his Drought Affected Farm Business Bill states that while a farming property was under declared drought (based on the definition of a one-in-20-year drought event), a bank or financial institution could not apply penalty interest rates or foreclose on an agricultural business simply due to a collapse of the loan value ratio (LVR) covenant of the terms and conditions of the loan agreement.

Additionally, if a bank or financial institution decided to foreclose on a borrower for any other breach of a covenant, term or condition, they could not bring the foreclosure into effect until a year after the business was no longer in a drought declared area.

"Yet every time these farmers put their hands in their pockets, they find their bankers' fingers there," he said.

“It's prudent to take a pause on any new action given the severe impact the drought is having”

ANZ said its drought support measures were aimed to ease financial concerns of farmers and to demonstrate ANZ's commitment to working with producers through the drought cycle.

The new package built on existing support available to drought affected farmers in the two States. The freeze on new farm repossessions would last until December 2015.

"While taking possession of a farm is always the last option after all other avenues have been exhausted, we feel it's prudent to take a pause on any new action given the severe impact the drought is having in Queensland and northern NSW," Mr Chronican said.

"We will also make available financial support to customers choosing to relocate off their land, but are unable to do so due to financial distress.

"We will also be increasing funding for rural counselling programs throughout the impacted regions.

"While I don't know when this drought is going to break, we do know many farming families have the capacity to be successful again in normal conditions."

ANZ was committed to working with these customers to support them through their current challenges.

Mr Chronican said it would also continue to work with government and farming groups to examine other longer-term solutions.

“People across the bush are on their knees due to the worst drought in a century”

Senator O'Sullivan said drought weary landowners across Western Queensland were hand feeding cattle while also fending off plagues of kangaroos and wild dogs.

"Some people across the bush are on their knees due to the worst drought in a century - and the banks continue to kick these people when they are already down," he said.

"The Drought Affected Farm Business Bill will reduce an abuse of power by the banks and allows landholders to keep some of their dignity."

ANZ is also promoting its dedicated "hardship team" as available to talk to farmers on 1800 351 548.

Customers were also urged to contact a local branch or relationship manager.

The Katter Australia Party (KAP) meanwhile have threatened to "name and shame" any banks which take possession of a property of a farmer affected by drought before the wet season arrives.

“We plead with people to let us know about any and every station going on the market," KAP leader Bob Katter said.

"If you know a neighbour – and we include the sugar industry and any other agriculture industry as well as the cattle industry – contact my office, and we will name and shame."

“To sell a property at the end of the dry season ... it is a bastard act”

Mr Katter said that unless Agriculture Minister Barnaby Joyce delivered "action and not words, he knows as well as everyone else in the industry that there will be no Australian farmers left".

"A week since the Winton Last Stand Rural Debt Crisis Summit there has not been a single thing done by the government.

"The $100 million in concessional loans ... is woefully inadequate to address the problem and only guarantees the bank gets repaid”, Mr Katter said.

The KAP has also promised to "name and fame the good guys", lauding ANZ's announcement.

"To the others, we warn you, we’re starting now. Every time you do sell up a farmer, we’ll name you”, Mr Katter said.

"To sell a property at the end of the dry season, before the wet season and before the Chinese and Indonesian markets kick in next year, it is a bastard act."

Senator O'Sullivan said banks had continued to be "obstructionist" on the issue of farm debt.

“The banks are living up to their reputation of being unreasonable bastards," he said.

“The banks could reprieve their position by ending its application of debilitating measures, such as penalty interest rates, that only serve to drive people further down the road to financial and emotional collapse.”

- with Katie McRobert

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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READER COMMENTS

andy
11/12/2014 4:07:05 PM

Sounds fair to me. Also possibly some provision to exclude/cap liability if forced sale does not realise outstanding debt?
wiseoldman
11/12/2014 4:23:09 PM

Good Move ANZ. But how retrospective did you make it????
Heaven
11/12/2014 4:23:43 PM

Cool bankers. But they have been presented like a bastard everywhere. Partially because the existence of bankruptcy liability. Not sure whether there was any true bankruptcy jail sentence to any household.
Anvil
12/12/2014 5:20:19 AM

Good point wise old man what about all the families they have already been destroyed with higher margins. A lot a good it will do them, their assets has all ready flogged by some receiver who always get paid regardless of the outcome. Maybe they should be paid on performance not by the hour.
Qlander
12/12/2014 6:50:03 AM

As soon as they are confronted by someone with authority they do a complete about face. Some one made a good point about 'risk premiums' on interest rates - you don't lower your interest rate in the bad times, you have no right to impose a 'risk premium' in the good times.
Keith
12/12/2014 7:15:39 AM

Once again, government intervention to possibly cause market distortions in the future! And will banks see this as a future risk when assessing loan applications? e.g. reduce their LVR? Good news story for the pollies, but this has the potential to cause massive issues down the track!
Frank Blunt
12/12/2014 7:48:34 AM

Because it's Christmas Bill and even the banks seem to have more compassion than you. You are an empty vessel with no soul Bill. A dead man walking.
Jacky
12/12/2014 8:48:13 AM

Hmmm. Methinks banking/borrowing costs for the rest of us in ag will jump markedly becuase of this.
wtf
12/12/2014 1:19:12 PM

Cheap credit and creating money is like eating chocolate, a little bit ok, any more and it will sink us. What has happened to these people is devastating, shutting the trade was beyond belief. Hammered by drought thereafter. BB is right, we need to take responsibility for ourselves. However this problem is a culmination of factors and credit creation is one of the biggest. We need far reaching changes to our banking industry to avoid the inflation that comes with creating money. David Murray where are u? I know this creates problems, however by big changes over time we can avoid this happening.
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