Opportunity for much-needed banking inquiry

A Parliamentary Select Committee will tomorrow consider a request from Labour’s Primary Industries spokesperson Damien O’Connor to hear from parties involved in the controversial banking loans swaps issue.

“This is a serious issue that needs careful consideration because it has major implications for primary sector financing where debt currently runs at close to $50 billion,” Damien O’Connor said.

“Recent claims that the wine sector may have also been adversely affected indicate the practice of selling complicated finance products to farmers has been far more extensive than previously stated.

“One bank - Rabobank - has said publicly that it believes these swaps are inappropriate for individual farmers.

“While the Commerce Commission is investigating and considering evidence from a number of farmers from throughout New Zealand, the issue is hugely complex and deserves a far more comprehensive investigation.

A similar inquiry in the UK by its Financial Services Authority has resulted in hundreds of millions of pounds being set aside by banks for compensation.

“I hope the collective wisdom of the select committee will support the need to hear from farmers affected by the loans and allow the banks to respond.”