Farmers converting to dairy or upgrading their existing dairy enterprise ahead of quota abolition next year have driven Bank of Ireland’s (BoI) €2.1bn worth of lending to the small and medium enterprises (SMEs) in the first half of 2014.

Sean Farrell, head of agri with Bank of Ireland, said his bank is providing over half of the new and restructured loans to the sector.

“The main driver of growth has been for land purchase and particularly from dairy farmers,” he said.

“Since the start of the year, BOI has approved loans for 11,000 acres. This is the equivalent of 425 acres every week,” he added.

A trading statement release by BoI on Monday said:

“The agri sector in particular has been performing strongly as it prepares for the abolition of milk quotas in April of next year. The bank has seen a steady increase in both applications and approvals from this sector.”

BoI state that it approved 85% of credit applications. However, it does not state if the full amount which the applicant wanted was issued.

Sale of bank

Meanwhile, a report in Wednesday’s Irish Examiner stated that Royal Bank of Scotland is considering the sale of Ulster Bank in the Republic of Ireland.

One of two private equity firms, either KKR or Apollo, is understood to be in talks to buy the business for in the region of €500m to €2.5bn. The current management structure would be expected to stay in place.

Ulster Bank has 25% of the agri lending market in Ireland.