The news before the end of last year that both Danske Bank and ACC Bank were pulling out of Ireland impacted thousands of farmers. It was estimated that there are around 2,000 farmers who were Danske customers and even more had accounts or loans with ACC. Since then, Danske has moved to close accounts and get farmers to change banks.

I was contacted by a number of farmers who are in the middle of that process. Those with strong businesses and good repayment capacity have no problem being taken on by another bank. However, there are many who will find it hard to get another bank to take on their business.

One farmer I talked to has a low level of loans and good repayment capacity and is in the process of moving his business to another bank. His biggest issue is that the change has forced him to use two solicitors and the overall legal costs were nearly €5,000. He is pushing for Danske Bank to pay for the legal costs as it is the bank that’s forcing him to move.

Others are in very different situations. The biggest issue is getting a new bank to take on their business. But one farmer that has approached other banks found that he is being treated like any customer.

“The different banks are keen to look. They make you submit all the information to look at repayment capacity, all the different loans and the security that is available,” he said.

In his case, the bank offered to give him a loan that was about 65% of the overall borrowing that he currently has with Danske. He is negotiating with Danske to try and get a write-off to match. He told me the new bank only cared about the repayment capacity and security, not what deal you do with the bank.

Danske has, from what I can gather, been quicker to offer write-off capital – especially where farmers were on low interest loans. While every case is different, I have heard of deals that involved a write-off of 20% or more in capital amounts. Again, it depends on factors like asset quality and security.

ACC is not as far down the process, with the deadline for accounts to be closed coming at the end of June.

The challenge for some farmers is to get another bank to lend the money. Issues like debt, core farm debt, working capital or if the loans are linked to off farm investments, have a major bearing on the negotiations.

There have been cases of a receiver being involved by banks to try and recover assets. If this is the case, the receiver will look for a forced sale, which often means less will be received for property.

Tom Doyle from the IFA Business Committee has been following a number of cases and last week he has asked for a meeting with Danske Bank. He is of a very strong view that most situations can be sorted out by negotiating over an adequate time. Involving a receiver has to be the very last resort and only when farmers are not willing to make reasonable attempts to negotiate.

“The move by Danske and ACC Bank are major blows for competition in the sector and the Government must ensure the remaining banks do not exploit this opportunity by increasing the cost of loans and banking facilities,” said Doyle.

With all direct payments being made electronically, farmers that change their bank account details must make sure they contact the Department of Agriculture.

The Department has seen a big increase in farmers changing accounts, many of which were previously with Danske Bank and ACC Bank. Farmers must notify Direct Credit Section, Department of Agriculture, Food and the Marine, Farnham St., Cavan, in writing. Forms can be downloaded from the Department website at www.agriculture.gov.ie.

You have to include your herd number as well as your PPSN number. You will be sent out confirmation of the changeof bank details and you may be asked to check if all details are correct.

Where a farmer wants the money paid into a Credit Union, a spate form (also available on the website) has to be used. This must be stamped by the Credit Union before it is sent in. The direct credit section can be contacted on 049-436-8283.

In brief

• The Danske and ACC closures are forcing farmers to look to other banks for credit.

• Danske is currently more proactive in doing deals and some write-offs are being proposed.

• Farmers should be firm and engage with the process, but they have to be realistic.

• Some farmer are finding it difficult to get new banks to give them loans.

• Get a good consultant: spending money is the last thing a farmer wants to do when he is in financial trouble. However, a good consultant is important when building a case.

• Make sure you change your bank account details with the Department of Agriculture.