Irish lenders slammed for ‘punishingly exorbitant’ farm loan rates amid France’s proposed 0pc offer

The interest rates being charged by Irish lenders have been described as “punishingly exorbitant” as the French government moved to back preferential lending to farmers at rates as low as 0pc.

ICMSA president Denis Drennan said the high-interest rates charged by Irish lenders were among the great imponderables of Irish life and criticised the “absolute indifference of the State to the burden those rates represent”.

It comes as French Finance Minister Bruno Le Maire said French banks will propose preferential lending to farmers as part of government efforts to defuse a crisis in the agriculture industry that has sparked weeks of protests.

Lenders including Credit Agricole SA and BNP Paribas SA will offer loans bearing interest rates between 0pc and 2.5pc, he said.

Farmers in financial difficulty will also be able to negotiate a one-year suspension of existing loans and reschedule repayments for as long as three years beyond that.

“This will be a huge relief for all the farms in the biggest difficulty,” Le Maire said, adding that the government will bring forward the launch of a system of guarantees for €2 billion of loans to help farmers invest in their operations by two months to May.

Drennan said the package announced in France presented a stark and instructive contrast with Ireland.

“The highest interest rate in this French package is 2.5pc — that’s about 4pc less than the standard Irish farmlinked which is going to be around 6.5pc,” he said.

Drennan said ICMSA has approached the Central Bank on several occasions in the past to try and get some rational explanation for the difference in interest rates paid by Irish farmers and their Continental counterparts.

“We have yet to receive any explanation that went beyond ‘that’s just the way it is’,” he said.

“Irish interest rates are inexplicably above Continental rates across the board for all categories of lending, but farm lending is the most inexplicable: farm lending is usually the most secured and collateralised, and that should be reflected in the rates charged.

“It doesn’t seem to make any difference here; the approach seems to charge what you like because there’s no one else the borrowers can turn to.”