Rabobank plays to loan strengths

Agribusiness specialist bank Rabobank is ditching customers in New Zealand who have transaction accounts but no associated rural lending.

The bank told affected customers of the change earlier this month and is working with an unspecified number to assist with their transition to another bank, a spokesman said.

The decision was made to allow the bank to focus on food and agribusiness lending customers and online customers, he said.

‘‘As a specialist food and agribusiness bank, our core business in New Zealand is lending to farmers and growers,’’ the spokesman said.

‘‘We have recently undertaken a review of our customer account arrangements with a view to offering transactional banking services only to customers who have associated rural lending with us.

‘‘We understand this change may be disappointing for some customers and we’ll continue to work with impacted customers to savings help them transition to a bank offering suitable retail products.’’

Rabobank expects to finish shifting these customers off its books ‘‘over the coming months’’, the spokesman said.

Massey University banking specialist Professor David Tripe said banks don’t make money from transaction accounts, and it was a service they provided in the hope of getting some other business.

‘‘Rabo’s strength is in rural lending rather than in running transaction accounts,’’ Tripe said.

‘‘Running current accounts for people who don’t have that is not a particularly financially rewarding aspect of business, so if they can leave that behind it won’t be upsetting to them.’’

Like any business, banks had the right to say they did not want somebody as a customer, he said.

Tripe said most farmers probably had some debt, although it depended on circumstances. Smaller farms or older farmers may be debt free.

Rabobank’s decision may have been brought to a head by the low interest rate environment, which meant there was less benefit in having customer deposits in transaction accounts, he said.

‘‘Rabo’s strength is in rural lending rather than in running transaction accounts.’’

Professor David Tripe

Massey University banking specialist