The Irish Farmers’ Association (IFA) has claimed that vulture funds are “killing off” farm businesses that have the potential to repay their debts and return to viability.
Addressing the Oireachtas Joint Committee on Finance, IFA president Joe Healy said the short-term, debt-recovery tactics adopted by the funds were damaging, as they overlooked the repayment capacity of the business.
“This issue is a particular problem for the farming sector because the security value to debt level tends to be significantly higher,” he told the committee.
Mr Healy cited Central Bank figures that showed outstanding borrowings in the agriculture sector are falling over the last eight years.
Between 2010 and 2018, outstanding credit in the sector fell from €5.1 billion to €3.6 billion, a reduction of 30 per cent.
Mr Healy said farmers view banks which sell their loan books as abdicating their responsibility to see through their dealings with their customers. “There is a loss of confidence in the banks among the farming community,” he said.
“They have to recognise this and provide all possible solutions to a borrower before the sale of loans to vulture funds,” Mr Healy said.
Also addressing the committee was financial adviser Pádraic Kissane, who berated the banks for taking a “short-term and short-sighted” view of distressed and non-performing loans.
“I cannot understand the reluctance for the most obvious solution which was term extension and interest reductions,” he said.
Amid the mass sell-off of underperforming loans by banks to funds, "We are today, as a country, exporting the profit from the recovery to entities that have done very little but wait in the wings of this country until meltdown, and have come in and picked up assets at the bottom of the market," 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 website of the main players in the Irish market the answers are clear,” he said.