NAB boss outlines measures aimed at mending ties with rural customers

NAB boss Andrew Thorburn has used a visit to Wagga to outline his bank’s plan to lift its game in relation to rural customers.

NAB chief executive Andrew Thorburn in Sydney. (Hollie Adams/The Australian)

National Australia Bank has ushered in a new era for relations with farming finance customers and banking customers in the bush, as the nation’s largest agribusiness lender looks to soothe community outrage about its withdrawal from regional Australia.

After a bruising round of hearings at the royal commission which probed a range of misconduct towards farming customers, NAB (NAB) chief executive Andrew Thorburn has used a visit to the NSW town of Wagga Wagga to outline how the lender will take a better approach to its rural customers.

“The Royal Commission and other inquiries reveal that in some cases we have lost touch,” Mr Thorburn said.

NAB will now allow customers to offset their farm management deposit against their agricultural loans. The bank will also end the controversial practice of charging “default interest” on customers who look likely to fall behind on loan repayments. Moreover, NAB, which has closed a number of branches in the Riverina region of NSW recently, said it would investigate ways it could bring more face-to-face services to customers and keep remaining branches open.

“Rural challenges are real, and we need to determine how to support these areas better,” Mr Thorburn told customers, staff and community leaders at the International Hotel in Wagga Wagga.

“This is a message we’ve heard loud and clear from farmers and rural customers right across the nation — many of whom have been affected by drought conditions.”

The royal commission heard NAB let a struggling cattle family remain on two outback stations for five years only because it knew it wouldn’t be able to sell the properties in the middle of a drought. But it used the five years since Ken and Debbie Smith stopped making adequate payments on their $3.2 million loan because of drought and low cattle prices to impose default interest rates of up to 18 per cent, mushrooming their debt to nearly $7m.

Earlier this year, National Australia Bank confirmed it was closing several branches around the Riverina region — in Ardlethan, Lockhart, Grenfell, Culcairn and Barham in NSW, and at Boort and Euroa in Victoria, in June. The big four banks had closed more than 100 branches over the past year, as the profitability of the bank branch model comes under pressure from technological disruption and the digitisation of financial services.

NAB’s plan tonight is also a win for Federal Agriculture Minister David Littleproud, who has also demand that they offer special accounts for farmers battling drought, known as a farm management deposit. Farm Management Deposits allow farmers to put up to $800,000 of pre-tax earnings into a separate account to access — and pay tax on — in a later year, for example when they are dealing with low earnings in a drought.