By FW staff
BARCLAYS is to axe its input finance service, Farm Masterloan, as part of a shake-up of agricultural lending aimed at boosting shareholders profits.
Masterloan is used by 15,000 producers and is the main victim of the move announced on Monday (14 June).
It will see the banks Highland Finance section incorporated into the recently-announced Barclays Agricultural Banking division.
First to be hit will be smaller merchants and producers representing the bottom 15% of trade; these services will end in late August and the remaining business in late November.
By then a replacement credit facility should be in place, although it may not be available to all existing customers.
Due to an administrative error almost 60% of customers received a “blunt” legal notice this week announcing the termination of Masterloan without any explanation of a follow-on service.
One Skipton, Yorkshire, producer called it a “bolt out of the blue” which left him fearing hed be left high and dry this autumn when looking to buy inputs.
A Barclays spokesman apologised, adding the correct set of letters was being re-sent this week to 8000 affected customers.
Looking to the future, Barclays head of agriculture John Page says one replacement plan is to issue plastic debit cards to customers with an agreed credit limit.
Users would probably be charged for what they use, plus a 1% up-front set-up fee. Interest would be charged at 3% over the base rate for secured borrowing and 4% for unsecured loans.
The new service would effectively see the end of merchants ability to grant loans to customers.
While Mr Page admits thats not been a problem in the past, some borrowers have been late payers, he says.
Merchants will also be assessed for suitability to use the replacement scheme and charged for its use.
There are advantages, says Mr Page. Instead of producers receiving individual merchant invoices, all purchases will be listed on a single monthly Barclays statement.