Farmers’ accounts windfall for banks?

Press, 9 January 1987, Page 3

Farmers’ accounts windfall for banks?

PA Hamilton Federated Farmers has accused some banks of receiving massive windfalls from the savings of young farmers. Banks rigorously deny the charge, saying any gains they make are balanced by concessions farmers get on loans.

Federated Farmers sharemilkers’ chairman, Mr Derek Riley, said banks were still paying only 3 per cent interest on money deposited in farm ownership accounts, yet were charging young farmers more than 20 per cent if their accounts went into overdraft.

“There is nearly $6O million tied up in these accounts, which young farmers cannot have access to until they purchase a property,” he said.

Young farmers with

’these accounts would continue to be disadvantaged until the Government allowed commercial rates to be paid on them, Mr Riley said. However, Trusteebank Waikato and the Bank of New Zealand said banks were limited by legislation to paying 3 per cent on farm ownership accounts.

The deputy general manager of Trusteebank Waikato, Mr Bruce Cronin, said the Government indicated late last year, when it deregulated home ownership accounts, that it was working on a new farm ownership finance package.

The bank was not receiving a “massive windfall” from farm ownership accounts, he said.

“In fact, any gain we might get from these accounts is balanced by the concessions on lending

young farmers get.”

These concessions included preferential treatment with regards to loans, lower mortgage interest rates and allowing sharemilkers to borrow against their herds at a discount. A Bank of New Zealand spokesman, Mr John Mac Gibbon, also said lending concessions balanced profits made on farm ownership accounts. “The volume of lending to farmers at concessionary rates far and away outweighs the volume of money in farm ownership accounts,” he said. Young farmers were also “cushioned” by being allowed to put their money into accounts paying market interest rates for most of the year before it was transferred to their farm ownership accounts, he said.