Farm families forgotten in ANZ loan grab: royal commission

ANZ bank has admitted it failed to consider the human toll of calling in loans and evicting farming families from their land.

Ben Steinberg of ANZ bank leaves Brisbane Magistrates Court after giving evidence to the royal commission. Picture: AAP.

ANZ bank has admitted it failed to consider the human toll of calling in loans and evicting farming families from their land.

Under the spotlight of the ­financial services royal commission, the bank yesterday said it had made allowances in its corporate accounts for taking over 7124 farm loans worth $2.4 billion from Landmark Financial Services in 2010, with the likelihood 12 per cent of the loans, worth $273 million, would turn bad.

But ANZ head of commercial lending services Ben Steinberg agreed with counsel assisting the royal commission, Rowena Orr, that the poor performing Landmark loans had been viewed only in terms of financial impact on the bank’s balance sheet.

He said the number of farming families that would have their lives changed forever by the bank taking possession of their land and homes had not been detailed.

The dealings with farm customers by ANZ, NAB, Rabobank, CBA and Rural Bank (Bendigo) are being put under the microscope by the royal commission in Brisbane. Some banks have ­admitted in pre-statements that they have found cases of misconduct relating to farm lending, or incidences when they did not meet community expectations or the banking code of conduct.

Ms Orr identified key issues to be exposed during the week, including contentious non-monetary defaults that often led to farm foreclosures. They occurred when farmers had not missed loan repayments but had a higher interest rate or foreclosure notice issued by their bank because reduced land valuations had changed debt-to-equity ratios on paper, triggering defaults or hiking penalty interest rates.

Another issue to be examined is the number of farmers who fell into financial trouble after banks bought the loan books of other lending institutions and then changed loan conditions or interest rates in a way that was unfavourable to customers.

Ms Orr said the ANZ had disclosed several incidents of misconduct in its submissions relating to farmer clients who had held loans with Landmark. They involved improper collection of debts, inappropriate sales practices and inappropriate lending by staff, she said. “(The ANZ) accepts that some of its dealings with former customers of Landmark fell below community expectations and that in some cases it may have breached its obligation to act fair and responsibly towards Landmark clients,” Ms Orr said.

“ANZ acknowledged it should have been more empathetic and that it had caused distress.”

Under questioning, Mr Steinberg conceded ANZ’s communications had been poor. During the transition from Landmark to ANZ, mistakes were made, ­including incorrect changes to ­interest rates charged and the size of loans. Mr Steinberg said farmers with Landmark loans received a proforma letter in March 2010 informing them that their business loans were now with ANZ.

An accompanying brochure told customers in small print that ANZ had the right to impose new fees and charges, alter the variable interest rate and terms of their loans, and give only 30 days’ ­notice. It was 60 days under Landmark. “We should have done a better job in communicating that; about what it meant to Landmark customers, many of whom had never dealt with a large financial institution like the ANZ before,” Mr Steinberg said.