SYDNEY (Reuters) - Australia’s Westpac Banking Corp said on Thursday it would disburse A$100 million ($74.2 million) in cheap loans to farmers as a record dry spell hits parts of the nation, while the country’s lenders fight to regain public trust amidst an ongoing misconduct inquiry.
The drought in Australia’s east, one of the worst on record, is impacting every area of rural life, often with global trade and price implications. Already many cattle graziers are being forced to sell stock they can no longer feed.
Westpac will offer some affected farmers loans at “heavily-discounted” rates and would also give impacted customers the option to defer their loans for up to 12 months, Australia’s second largest lender said in a statement.
“This is the first time in Westpac’s 200-year history that we have set aside such an amount to provide immediate and long-term financial relief to our agribusiness customers,” National Agribusiness Manager at Westpac said.
The Sydney-based lender said it had expended its agribusiness team by 15 percent to offer options to customers such as financial relief from deferred debt repayments and fee wavers. It did not specify the discounted rates on offer.
Farm banking in hot, dusty Australia has long been tough and although it is a small component of overall books, rural loans are some of the riskiest and most politically sensitive.
Last month, Westpac’s smaller rival, National Australia Bank, moved to soothe public anger after a major misconduct inquiry showed it dealt harshly with rural borrowers in distress, saying it won’t penalize farmers for loan defaults due to the drought.
The other two members of Australia’s powerful banking oligopoly controlling about 80 percent of the market - Commonwealth Bank of Australia and Australia and New Zealand Banking Group - have also moved in recent weeks to offer farmers some relief.
CBA offered offset accounts on their mortgages, while ANZ said it would suspend loan repayment for up to three months, waive restructuring fees and committed not to increase interest rates to distressed customers.
Neither of Westpac’s three competitors quantified the cost of their drought-relief measures.
Reporting by Paulina Duran; Editing by Gopakumar Warrier