Establishing a new stand-alone bank for farmers is the only solution to the closure of the ACC Bank and the increasing dominance of AIB and Bank of Ireland in the State’s banking sector.
This is the view of Labour Galway senator Lorraine Higgins who is calling on the Central Bank and the Minister for Finance Michael Noonan to introduce, or grant, a new licence, to a bank which will concentrate on lending to farmers.
The Athenry based senator said closing ACC will “hurt our farmers and business owners”, so a new initiative “is needed to provide finance to small to medium size businesses and farmers”, and become a competition lever to “force the major banks to improve their services”.
In the Seanad on Tuesday, Senator Higgins said such a bank is necessary given that the Agricultural Credit Corporation, set up in 1927 to finance agricultural development, will leave the market next year.
She said the bank has a big volume of loans in difficulty which will be outsourced to a collection agency. “This poses obvious threats to the farmer, his livelihood, and the family farm which I am most concerned about especially given the limited options for acquiring loans elsewhere,” she said.
Sen Higgins warned that absence of ACC will see Bank of Ireland and AIB will command 70 per cent of the market place, a “level of dominance not been seen since the 1980s”. She added that the €100m from the European Investment Bank being made available to AIB and their borrowers only, will “further bolster this uneven situation”.
“The funds are welcome but it is most unfortunate it is being concentrated in this bank only,” said Sen Higgins. “Competition is not being allowed to thrive in the Irish banking industry.”
Responding to Sen Higgins, Minister John Perry, on behalf of the Minister for Finance, said the Government recognised a strong agriculture sector “is vital to our economy and plays a crucial role in employment growth”. He said a “key priority” is to ensure “an adequate pool of credit is available to fund SMES, including farms, in the real economy”.
He said this would be done through the establishment of the Ireland Strategic Investment Fund which will absorb the National Pensions Reserve Fund and activate the NPRF’s €6.4 billion of resources, making them available for investment on a commercial basis to support economic activity and employment in Ireland. The Minister for Finance expects enabling legislation will be enacted early next year.