Vulture fund legislation a ‘significant first step’

It is estimated that up to 2,500 farm families are in the process of trying to negotiate with vulture funds to keep their farms.

Hannah Quinn-Mulligan

9 May 2018

Vulture fund legislation a ‘significant first step’

The Bill is expected to exert more control over vulture funds and could help farmers who are currently trying to negotiate to retain their family farms. \ Ramona Farrelly

Vulture funds will be subject to inspections and fines imposed by the Central Bank for regulation breaches should a bill which has received cross-party support be passed by the Government. Currently, an intermediary or credit servicing firm must act on behalf of a vulture fund in Ireland, and only this agent is subject to regulation under the Central Bank.

Vulture funds will be subject to inspections and fines imposed by the Central Bank for regulation breaches should a bill which has received cross-party support be passed by the Government.

Currently, an intermediary or credit servicing firm must act on behalf of a vulture fund in Ireland, and only this agent is subject to regulation under the Central Bank.

Central Bank influence

However, the Consumer Protection Bill 2018 will increase the Central Bank’s influence over the behaviour of vulture funds operating in Ireland, and the Government has pledged to work with Fianna Fáil to bring the bill into effect, although a timeline is yet to be confirmed.

“Many businesses and farms have been treated in an appalling manner by these funds,” the Fianna Fáil spokesperson for finance Michael McGrath told the Irish Farmers Journal.

“It is essential now that the Central Bank is given the authority to regulate them and that is what this bill is designed to do. The bill is certainly not a silver bullet but it is a very significant first step.”

The IFA has estimated that up to 2,500 farm families currently have loans held by vulture funds, and have criticised the “ever-increasing aggressiveness” of so-called vulture funds such as Cerberus.

However, even if the legislation is passed it will not prevent the possible future sale of farm loans to vulture funds.

“I cannot stop these sales, even by the banks in which the State has a shareholding,” Minister for Finance Paschal Donohoe has stated.

Ulster Bank has already sold a loan book containing €125m worth of farm loans to Cerberus, and Permanent TSB and AIB have announced potential loan sales to vulture funds this year.

The number of non-performing loans in Ireland is higher than the EU average, and it is understood that farm loans are often included in loan book portfolios as they provide attractive remuneration prospects for vulture funds.

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