Rabobank has joined National Australia Bank, Commonwealth Bank of Australia and Rural Bank announcing it will offer loan clients assistance to offset interest from farm management deposits (FMDs) against loan costs.
Rabobank Australia chief executive officer, Peter Knoblanche, said the bank would provide more detail to clients about its FMD offset solution “in coming weeks”.
The offer will involve an interest fee adjustment for eligible borrowers with FMDs and rural loans.
Late last week Commonwealth Bank rushed in promising to make a similar offer.
It will make a credit adjustment for customers with eligible FMDs and business loans.
The amount will be calculated for the 2017-18 financial year based on the relative balances of the FMD and the business loans, with the credit made pending customer acceptance of this offer.
We’re pleased to extend our package of drought assistance measures to include this new offer which we believe will give additional peace of mind
Until now Rural Bank has been the only farm lender offering direct interest offsets to borrowers with FMD accounts, with other banks arguing the arrangement does not fit with most farm sector customers because loans generally involve family company entities and trusts, not individuals.
FMD accounts are held by sole traders or partners.
However, federal Agriculture Minister, David Littleproud, has been scathing about banks for not doing more to provide interest offset options from the $6 billion-plus currently held in FMDs.
Responding to Mr Littleproud’s most recent criticism CBA’s regional and agribusiness, executive general manager, Banking Grant Cairns, said he felt farmers with eligible accounts would now benefit, especially those in need because of the worsening drought.
“We’re pleased to extend our package of drought assistance measures to include this new offer for farmers, which we believe will give additional peace of mind,” he said.
Mr Knoblanche said Rabobank also reviewed its product offering in light of the current severe dry conditions facing farmers in parts of the country.
“This benefit will be in addition to other options the bank’s clients already have to manage their interest costs through their flexible specialist rural loans,” he said.
Last week Rabobank announced a range of measures it has in place to support clients impacted by current drought conditions, and confirmed it will not apply higher (penalty) interest rates on loans in default due to drought and in cases of natural disaster.
Westpac, ANZ resisting
Mr Littleproud noted Westpac Banking Corporation and ANZ Banking Group were yet to move on the FMD offset issue, and hoped they would have announcements coming.
However, Westpac and ANZ have followed NAB and CBA’s cash donation commitments to drought appeals.
Westpac has paid $100,000 to The Salvation Army Rural Support Services Program and is offering $100,000 in Community Resilience grants.
ANZ will provide $500,000 to Financial Counselling Australia to distribute to rural counselling agencies working in drought-affected areas and is giving another $500,000 to the Foundation for Rural and Regional Renewal for drought-affected communities in Queensland.
Westpac also reminded customers of personalised financial support available to them.
The Salvo’s Rural Support Services program helps relieve individual financial pressures and supports people with health related issues.
The community resilience grants will go to not-for-profit organisations and community groups in drought-affected areas.
They form part of the five-year-old Westpac group Natural Disaster Recovery Fund, which directs money to projects which help build community resilience.
More bank donations flow
Westpac is also urging its staff to give generously to the Salvation Army and other registered drought-related charities, promising to match employee donations to eligible charities.
ANZ will also match its staff donations to the Red Cross.
Our thoughts are with the many thousands of people that are battling one of the worst droughts on record
Westpac agribusiness national manager, Stephen Hannan, said the bank had a deep commitment to supporting rural and regional Australia.
“Our thoughts are with the many thousands of people that are battling one of the worst droughts on record,” he said, reminding farmer customers personalised financial support was available to them.
“We work closely with our agribusiness customers to support them in good and bad cycles and have been proactively contacting many.”
ANZ emphasised it had a long-standing position not to increase interest rates on distressed customers and would provide interest rate relief in cases of extreme distress for customers in drought declared areas.
Australian business executive, Mark Hand said ANZ had worked closely with government, industry and the community to provide it’s additional relief offer and hoped it delivered much-needed support to help customers through the tough times.
Financial Counselling Australia chief executive officer, Fiona Guthrie, said the bank’s donation would enable significant numbers of families in financial hardship to receive essential counselling in drought-affected communities.
FRRRs Natalie Egleton said ANZ’s money would help expand the existing Tackling Tough Times Together (TTTT) program outside Queensland.
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