Australia bank NAB offers sops to drought-hit farmers after inquiry flak
SYDNEY: National Australia Bank moved to soothe public anger after a major inquiry showed it dealt harshly with rural borrowers, saying it won’t penalise farmers for loan defaults in droughts amid a record dry spell in parts of the nation.
Farm banking in hot, dusty Australia has long been tough and although it is a small component of overall books, rural loans are some of the riskiest and most politically sensitive.
That has made it a lighting rod for criticism as the worst drought in living memory sweeps over parts of eastern Australia at the same time as a quasi- judicial Royal Commission probes misdeeds in the banking sector.
NAB’s move, which also includes offering access to discounted loans to farmers, is the latest from banks scrambling to reform their own practices ahead of expected recommendations for stricter regulation of the sector.
“The Royal Commission and other inquiries reveal that in some cases we have lost touch,” NAB chief executive officer Andrew Thorburn said in speech on Monday evening in the rural town of Wagga Wagga.
The bank, Australia’s largest rural lender, would no longer levy default interest if drought put borrowers behind on repayments and added that farmers who make deposits could also access money at discounted interest rates, he said.
The relief comes as winter rain across much of eastern Australia has gone missing, with rainfall levels at or near record lows across vast tracts of the country.
Production of wheat, Australia’s largest rural export, is set to fall to an eight-year low this season and graziers are killing cattle and sheep by the thousand lest they starve to death.
“If the banks could hold off on pushing people (and the government helped) we wouldn’t be half as bad off, really,” Ash Whitney, 58, told Reuters from his cattle property 330 kilometres ( 205 miles) northwest of Sydney where he has lived all his life.
“We’re just about at the end of what we can afford,” he said, of the expense of buying in hay to feed his herd.
The drought has hit fertiliser and pesticide maker Nufarm Ltd, which slashed earnings guidance on Monday as demand fell, while the country’s biggest bulk grain hander, Graincorp Ltd, made a profit warning in May.
For farmers, already disillusioned after years of watching city executives shutting local bank branches, the drought has brought closer to home the financial industry misconduct emerging from the Royal Commission.
The commission heard in June how NAB charged a cattle-farming couple in Queensland more than A$2.6 million (US$2 million) in default interest alone after flooding rain followed by drought pushed them into arrears on a A$3.1 million loan. — Reuters