Ulster Bank sells on '˜bad' farm debt to Cerberus

On Monday the bank confirmed the completion of ‘a sale of significantly impaired loan portfolio’, predominantly in the Republic of Ireland to US investors Cerberus.

A statement said the sale would enable the bank to strengthen its balance sheet for the benefit of its customers.

The statement added: “The loans involved are all in Ulster Bank’s problem debt management unit and have been in arrears or under specialist management for a significant period of time. We will be in contact with all affected customers in the coming days to help them as their loans transition to their new owner.”

The vast majority of the loans, termed as distressed, belong in the Republic of Ireland, with around 12% based in Northern Ireland and valued at around £261 million. The sum includes around £22m in agricultural loans in the province.

A Co Londonderry farmer affected by the move told Farming Life that he believed that as many as 300 farms could be included in the sale of bad debt. However, a spokesperson for Ulster Bank said that ‘only 1% of the transactions relate to agricultural customers in Northern Ireland’. He added that all of the existing rights, obligations and regulatory protections of the borrowers transfer with the loans.

The Co Londonderry farmer said he had been in negotiations with the bank over a period of time in an attempt to settle the matter. He said he had been asked to pay £10,000 and his debt would be withdrawn from the sale and then he was asked to align a number of his accounts, but had subsequently been told this was no longer acceptable.

“I am not in arrears but they are still selling on my debt,” he added. “I feel that it is totally unreasonable and unfair, the way things have been done, for a company that has been baled out by the public.

“My assets are ten times what my loan is. My loan is £97,5000 and I have an arrangement in place which means it will be paid at the end of ten years, but yet the bank is still going ahead and selling the debt. I fully intend to pay my debt.

“Farmers are cash poor and asset rich. I have been with Ulster Bank for a long time and even recommended it to family members. I am astonished how many farms are involved. When the whole building business went wrong, Ulster Bank didn’t get into trouble lending money to farmers.”

The farmer said he was worried about what would happen to the farm if Cerberus sells his debt on to a third party.