Ulster Bank has defended its treatment of a portion of its business customers in financial distress, as a deadline for them to provide refinancing details to a specialist impairment unit is reached.
The bank’s affected customers were given until the end of March to say if they would be in a position to repay or refinance their borrowings or else face having their loans sold on to third parties.
With 75 per cent of the loans involving borrowings which are severely impaired and the balance in some form of arrears or default, refinancing options for most would be extremely limited.
If the loans are included in a sale process by the bank, current account facilities could subsequently be withdrawn from customers with 60 days’ notice.
The loans are spread across various industry sectors but the farming lobby has been particularly active in expressing concern and has met the bank on a number of occasions.
The New Land League has said the bank plans to sell the loans to a "vulture" fund at a massive discount and called on the Government to intervene to force the bank to first offer to sell the debt to those who had borrowed the money with the same level of discount.
The Irish Farmers’ Association has also expressed dissatisfaction at the manner in which the bank plans to dispose of the loans in its specialist loans arrears unit. It described as “completely unacceptable” the treatment of farmers who have “engaged constructively to resolve their financial difficulties”.
"A single phone call with no written communication and very little background information has created real unease among Ulster Bank customers," IFA spokesman Tom Doyle said.
He said the association rejected the bank’s strategy of packaging up farm loans with good farm asset security to make a more saleable loan portfolio for vulture funds.
Loan disposal process
In a statement, Ulster Bank said it was “in contact with a number of business customers, who are outside current arrangements or in arrears and under special management in our problem debt management unit, to discuss the potential inclusion of their debt in a future Ulster Bank loan disposal process together with their options for repaying or refinancing their debt in advance of any such process”.
A bank spokeswoman pointed out the affected borrowers were “not mainstream customers, they are in our problem debt management unit and this action is part of the Bank’s strategy to manage non-performing loans”.