Most cattle farmers are convinced that there is little real competition in beef processing in this country. We have had rows, protests, claim and counter claim, even an investigation by the Competition Authority. Ultimately, with ABP, Kepak and Dawn accounting for almost 90% of processing, farmers will always feel their hands are tied behind their backs, and are pinning their hopes on an ombudsman with real powers to shine a light on food chain equity.
With the wind-down and shutdown of Ulster Bank now confirmed, the banking sector is less competitive than beef processing. Bank of Ireland and AIB will between them account for the majority of Irish farmers’ banking and borrowing. It’s as stark as that. The fact that one of the banks is effectively State-controlled only adds to the worry. Were a Government in place that wanted to stop on-farm investment and development, could it turn down the tap on AIB lending to farmers? We’ve seen stranger things happen. It might seem unlikely but can’t be ruled out.
The Irish banking sector should hold some attractions for foreign banks. We have a functional economy that was one of the more dynamic in the EU before Covid-19 paralysed so much, we house many international financial institutions in the IFSC, and there is an obvious void. Perhaps one or more of the great European banks could be enticed in. They mightn’t even have to establish an on-the-ground presence. With so much banking online, would it matter that much if the local branch was in Berlin or Paris rather than Ballina or Portlaoise?
Those who know more about banking than me say there is one significant impediment to a new player coming in. Ireland is still required to maintain higher reserves than other countries because of the extent of the banking collapse in 2008. The man who brought these rules in as European Central Bank boss was Mario Draghi. He has just become the Italian prime minister, and perhaps he should get a call from Micheál Martin or Michael McGrath. They should ask if he will help lift this yoke, which sees Irish banking customers pay among the highest interest rates in Europe.
One final thought. The credit unions are probably now more important than ever for farmers. The next time you are planning to borrow, pay them a visit. At least you’ll get a quote.