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Irish Banks “pillaging – and being allowed to pillage” their farm customers on interest rates

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The President of ICMSA, Pat McCormack, has again criticised what he termed the “deafening silence” from the Government and the regulators on the question of the excessive interest rates being charged by Irish Banks, particularly the interest rates being charged by banks on loans to their farmers customers.  Mr. McCormack is a board member of the European Milk Board and has used that office to get a clear picture of the real rates being paid by mainland EU farmers compared to their Irish counterparts. The differences are, in his words, “jaw-dropping” with German farmers, for instance, at interest rates of between 1 and 1.8%, in France, the intertest rates paid vary between 2 and 2.8%, substantially lower than what Irish banks customarily charge.   In Denmark, the rates – including an administration charge – might amount to 3%, with Belgium coming in at less than that.  The ICMSA President was scathing about the rates being charged here and the complicity of the Government and state agencies charged with monitoring their behaviour.

“We estimate that a farmer with a loan of €80,000 over a five-year term will pay over €6,500 more than their German counterpart borrowing the same amount over the same term.  The only appropriate word for this is ‘pillaging’ and it’s long past the time when someone in authority asked our regulatory agencies for an explanation”, said Mr. McCormack.

“Unfortunately, we have here the old story where we know for an absolute fact that we are being – let’s say it straight out – ‘ripped-off’ by our Irish banks who are charging over double the interest rates that the French and German banks charge while still making a healthy profit. It’s exactly the same as the mortgage rates where we see the same comparatively punitive interest happily loaded on by the Irish banks that sees Irish customers paying thousands more over the term of the loan than their mainland EU counterpart and all without so much as a chirp out of the regulatory system – the ultimate sleeping watchdogs.  Farm loans are probably a bank’s dream business in that they are usually fully secured against the farm itself and so completely collateralised, on any logical basis that would make farm loans cheaper because there’s less risk of defaulting.   But what we see here is that not alone is that repayment safety factor overlooked; we see that comparatively penal rates are loaded on to what is the safest loan that a bank can make.  Whenever we point this out to the Government and regulatory bodies, we are told to ‘shop around’ for cheaper rates.   But – thanks to another very dubious piece of legislation passed a few years ago about which we protested – farmers who do secure a cheaper rate from a competitor Irish bank now find they have to pay two sets of solicitors when they switch their loan and can very often run up €3,000 or more in legal expenses.  The official Irish position is that they seem happy to allow the banks to pillage their farm customers and then permit the solicitors to join in the event that the farmer can find a cheaper interest rate”, said the ICMSA President.

“The over-riding question is this: why and how have we ended up paying an interest rate double that of Germans when our security against the loans is worth as much – if not more – than theirs?  That’s the first question and the second is this: at what stage will the Government and its regulators actually do something about the officially sanctioned pillaging of the Irish people by their banks through comparatively penal interest rates? “, concluded Mr. McCormack.