Senior Canadian bankers lined up on Parliament Hill last week to deny farmer charges that their banks are imposing new charges on cattle farmers forced to seek new financial arrangements because of BSE.
“The instructions have always been out there that during this crisis, you do not charge additional fees for anything and that’s our policy for this,” said Don Wither, director of market segment solutions for the Bank of Montreal. “This is a cash flow issue. This is a crisis. Bank of Montreal is fully aware of it.”
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Executives from the other chartered banks gave the same message when they appeared before the House of Commons agriculture committee Oct. 7.
MPs said that was not what they are hearing from constituents who have been affected by low prices and lost markets because of the bovine spongiform encephalopathy crisis.
“Out there on the ground, branch to branch, I’m seeing these charges come through,” said Canadian Alliance agriculture critic and Saskatchewan MP Gerry Ritz. “A lot of farmers and ranchers are phoning me and saying, ‘man, I went in and I can just pay interest-only for this short term but it’s going to cost me an extra $100 a month to do that. How come?’ “
He said farmers asking for a renegotiation of their bank loans are hit with a series of charges for the work, “$10 for this, $50 for that.”
And one farmer reported that he had to spend $5,000 to have the bank draw up a new business plan for the operation.
Committee chair Paul Steckle said he and other MPs also had received farmer complaints about bank charges.
“I think people want to know where they stand in terms of their costs of doing business at the bank. They don’t like to see these escalating little bits biting away here and biting away there,” said Steckle, an Ontario Liberal MP.
The bank executives insisted they have instructed branch managers to be sympathetic to affected farmers, to consider their business situation and to offer flexible or interest-only repayment or other breaks when appropriate.
“The measures they have undertaken reflect the responsive, patient client-based approach that banks have discussed with agriculture ministers and the beef industry,” said Terry Campbell, policy vice-president of the Canadian Bankers’ Association.
The banks said credit extended to cattle producers is worth close to $4 billion.
After the meeting, Ritz said he believes the farmer complaints and the bank denials.
“I believe them that it is bank policy not to add extra charges in this circumstance,” said the northwestern Saskatchewan MP. “That message isn’t always getting down to the branch level. Now, we have it here on the record so I’ll be making sure my producers get a transcript of this so they can show it to their bankers when the topic of charges comes up. I see this as a reality check for the banks.”
