Richard McIntyre: Federated Farmers spokesperson on the Finance Minister's planned joint inquiry into rural banking

Rural communities are elated to see their repeated concerns being heard.

The Finance Minister has asked the Finance and Expenditure and Primary Production Committees to lead a joint inquiry into rural banking.

Federated Farmers says rural New Zealanders are facing huge financial pressures - worsened by unfair interest rates.

Spokesperson Richard McIntyre says it's causing farmers to sell up.

"It's the banks making excessive profits and it's a lack of competition in the rural banking space. We've only got 5 rural banks, but we have about 18 in the residential space."

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Episode Transcript

Speaker 1 (00:00):
The government has finally asked for an inquiry into rural banking.
Prime Minister Chris lux And says today said that he's
asked the Finance and Expenditure Select Committee to dig into
the concerns that farmers have about the way the banks
are operating.

Speaker 2 (00:12):
They will joint me work on working through with the banks,
their chairs and their CEOs with a public public inquiry.
And that's really to make sure that we've got competition.
We want to make sure customer service and importantly look
at bank profitability.

Speaker 1 (00:25):
Richard McIntire is the Federated Farmer's National Dairy Chair and
with us now, hey Richard, Hey, Heather, what is the
treatment from banks that farmers aren't enjoying?

Speaker 3 (00:35):
Oh, look, it's a whole anch of stuff. Really. The
farmers are looking at the interest rates of that paying
compared to residential home home owners and seeing quite a
quite significant difference there, and they're asking why is it
the case? Is it fair and reasonable? Are our banks
favoring residential ending over rule ending? And also that the
treatment of farmers when they become distressed. You know, there

(00:57):
are a lot of farmers say, hey, look I used
to have a really good relationship with my bank. I
don't really see what's changed with my business of anything.
I think my business is in the stronger financial position.
But their banks are putting more and more pressure on them,
and we're seeing some really perverse outcomes there in that respect,
where farmers that you know, you can't see how they're
really rescued to the banks or the financial system, to
be fair, are being forced to pay very high interest

(01:19):
rates and in some cases forced to sell up.

Speaker 1 (01:22):
How high is the interest rate, well, you.

Speaker 3 (01:25):
Know, depending on the farming business. What I'm hearing, there
are a lot of farmers paying in the nine some
of the tens. We're having some very high overdraft rates
twelve to fourteen percent. And we're also having farmers that
you know, I struggle a little bit with the current
commodity cycle and not make their profit. But banks are
still demanding to have principal repayments, and the fact that
we're sending the overdraft so that the principal repayments can

(01:47):
be made, and therefore essentially changing from say nine percent
interest rate with turno through to a twelve or forteen
percent and straight on the overdraft. And as you can imagine,
that's in no way the best interests of the farmer.

Speaker 1 (02:00):
Are the banks not just acting in their own base
interests for their own business or is there something else
going on here?

Speaker 3 (02:06):
Well, look there's sitting in behind all of this, you know,
there is a reserve bank regulation. And when we sort
of when we ask a few questions about what's driving
these higher interest rates, the bank's point of the finger
right at the Reserve Bank and say, hey, look it's there.
It's all of their regulation, their capital requirements. They're at
at the moment increasing the capital requirements for rule ending
in order to in order for the ugilant financial system

(02:28):
to worst at a one in five hundred year event,
which is all well and good. But then you talk
to the Reserve Bank and they say, hey, look, their
regulatory settings are fine. It's the banks making excessive profits.
And it's a lack of competition in the real banking
space because we've only got five rural banks, but we
have about eighteen in the residential space. So one of
the things we'd love to look at is what's driving

(02:50):
Is there enough competition? Enough competition there? But what's driving
only five banks wanting to be in the real space
but eighteen in the residential space.

Speaker 1 (02:57):
Fair enough, Richard best of getting to the bottom of this.
Richard McIntire Federated Farmer's National Dairy Chair.

Speaker 2 (03:03):
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