The news means that the agri-banking sector has effectively been reduced to two players for all but the largest operators. The announcement is not surprising but still comes as a disappointment.

On Friday last, the one-time state-owned farmer bank, the Agricultural Credit Corporation, announced that in 2014 they will close all their business centres to the public and intend to give up their banking licence.

They will, however, continue to be a regulated entity and will support their customers in the agriculture sector, given its strong heritage in this area. All funds on deposit with the Bank will be repaid in full.

“Importantly, there will be no changes to the businesses of Rabobank Ireland plc, which continues to have a strong position in the food and agri sector, and RaboDirect, two other operations of the Rabobank Group in Ireland, and they will continue to operate as usual with no impact on their customers or businesses as a result of this restructuring” a statement said.

As part of the restructuring, the bank will also initiate a cost-reduction programme through a voluntary-led severance programme, which will see a reduction of up to 180 employees, from approximately 470 at present.

Commenting on the decision, Kevin Knightly, country manager, said: “ACCBank has incurred significant losses since 2008 due to the deterioration of the Irish property market. While costs have been cut significantly, including a substantial restructuring programme in 2009, we are heading towards a situation where, without intervention, our costs will exceed our income during 2014. This is an unsustainable position and we need to take action now.”

He added: “ACCBank has remained at the forefront of loan recovery activity in the Irish market. We will continue with our approach to loan recovery but do not need to be a fully licensed bank for this purpose.”

The Irish Farmers Journal contacted both AIB and Bank of Ireland to establish their commitment to the farming sector.

“AIB has a commitment with the Government to lend €4 billion to SMEs this year. Agri lending makes up a significant proportion of our new business lending to SMEs and we are focused on supporting viable lending proposals. “

Bank of Ireland (BOI) for their part, say: “We estimate that circa 40% of Irish farmers have a Bank of Ireland account. Based on Central Bank statistics, BOI estimate that they provide “over 50% of all new lending to the agri sector.”

Farmer reaction

IFA farm business chairman Tom Doyle expressed concern at the ACC announcement, describing it as “another major blow for competition in the sector. He called on the Government to ensure that the remaining banks do not exploit this opportunity by increasing the cost of loans and banking facilities.

“ACC, which has traditionally been known as a farmer’s bank, has provided banking facilities for thousands of farmers over the years” Doyle said. “IFA has been in contact with ACC to highlight farmer concerns and will meet with management as soon as possible.”

ICMSA president, John Comer, said “the disappearance of another source of credit and financial services to Irish farm families is very regrettable”.

The cessation of current accounts and overdraft facilities would effectively force farmers to move all their banking to a new institution, involving major disruption, he predicted.

“The danger is of increased charges as well as possible legal fees to cover the transfer of liens or mortgages” said Comer. “It is now in the national interest that every effort is made to locate and bring in financial institutions that can supply credit at reasonable terms, so necessary for the state’s biggest and most dynamic exporting sector.”