Bank sale angers Canty farmers

Press, 21 August 1989, Page 3

Bank sale angers Canty farmers

By

DAVID LUCAS

Canterbury farmers are angry and disappointed that the Government has sold the Rural Bank to Fletcher Challenge.

Owning the bank would allow Fletchers to tighten its grip on the rural sector and ensure it remained a main player in the industry, several farmers suggested. News that Fletchers was the successful bidder came as a surprise on Friday to farming leaders and Rural Bank clients, who had hoped a farmercontrolled group, led by Sir Peter Elworthy, would be successful. The president of North Canterbury Federated Farmers, Mr Oliver Grigg, said he thought a farmercontrolled organisation had stood a fair chance of getting the bank, considering the Government had earlier appeared to favour a farmer bid. The decision to sell to Fletchers would add to the uncertainty in the rural sector caused by the drought and debt problems.

Mr Grigg said he hoped the price paid by Fletchers would allow the bank to be “farmer friendly.” If the price was high the bank might be forced to take a harder line on debt. The future of the bank would depend on it maintaining the good will of clients, said Mr Grigg. Without a degree of sensitivity for clients caught by drought and the economic restructuring, the new owner could undermine the existing good will. The test would be whether Fletchers would

allow the bank to operate at arm’s length with autonomy and flexibility or keep it under tight supervision. Mr Lindsay McGrath, the chairman of the North Canterbury branch of the Rural Bank Mortgagors’ Association, said Fletchers had bought the bank at a bargain price of $1 billion. Other Government organisations had sold for seven or eight times their annual profit, but the Rural Bank had been disposed of at a price four times its profit. Many farmers did not want to deal with Fletchers (through Wrightson) and should not be placed in such a difficult position by having their mortgages transferred there. The national president of Federated Farmers, Mr Brian Chamberlin, expects many farmers to refinance their mortgages to avoid being placed at the mercy of a monopoly. This could have a spin-off in the form of additional clients for competing stock and station companies. Mr Denis Hazlett, the general manager of Pyne, Gould, Guinness, said that independent and local companies might benefit. Mr John Rickard, chairman of the mortgagors’ Mid-Canterbury branch, was disappointed at the decision. Farmers had accepted the sale negotiation process because they believed the farmer-con-trolled group was favoured by the Government.