Australia’s largest farmer bank has been left with $2.3bn in losses as the government prepares to cut off credit to the bank.
The Commonwealth Bank of Australia (CBA) has reported that it will be liquidating its Australian operations and cutting staff in response to the Government’s announcement that it would end its mortgage guarantee scheme for farmers.
The bank will also lose $4.4bn as it prepares to lay off staff as a result of the decision.CBA will also cut its lending to agriculture, with its lending on agricultural products and infrastructure to a total of $9.3 billion by the end of the financial year.
In a statement, CBA CEO Steve Jackson said the bank was reviewing its lending policy and would “implement the most appropriate and prudent course of action for the financial position”.
The move comes after the Government cut the $8.6bn it was providing for farmers in 2017 to $6.2bn.
The Government has been accused of cutting the Government Farm Credit scheme in response.
It will also axe a scheme that provides loans to small and medium sized farmers, which will result in more than 10,000 farmers losing access to the $6,000 grant, which is used to finance up to 15 per cent of the cost of a property.CAA’s chief executive Andrew Ransford said the loss of a loan would be “disappointing” to farmers who had worked hard to build a strong financial position.
“While we would like to see the scheme continue, it is clear that the Government will be cutting the program to save money,” he said.
“We will be laying off some staff, however, the impact of this will be felt most by farmers who have invested in the industry.
Citing the “painful” impact of the loss, Mr Ransfords said the financial situation of the farm credit scheme would remain “painfully and significantly worse” for some time.
The CBA will begin liquidating and laying off staff at its Perth branch in October.
In July, CAA announced that it was winding down its Australian operation.
Cabela’s, the biggest retailer in the supermarket sector, said it would lay off 1,500 staff and cut 5,000 jobs, which were mostly in the WA and NT.
Coca-Cola said it had laid off 2,000 staff and laid off another 2,500 in the states of New South Wales, Queensland and Victoria.
Its US operations will also be affected by the move.