Own bank for Fonterra???

Would-be Fonterra director Russ Rimmington is proposing the dairy co-operative investigate creating a bank for dairy farmers. Mr Rimmington, a candidate in the Fonterra board elections, said the idea came from a South Island shareholder reports Stuff. The bank would not be a piggy bank for farmers under pressure, but a stand-alone business funded by private equity which specialised in loans for land, herds, dairy plant and farm machinery. Using the TSB Bank, which his brother Kevin headed for 23 years, and Kiwibank as examples of what Fonterra could achieve, Mr Rimmington suggested branches could be established in the co-operative's RD1 stores. Multinationals, such as Claas and John Deere, had their own banks. New Zealanders can own their own banks," he said. "We had PostBank and sold it off. We also had the RuralBank and sold that, so maybe it's time to have the Fonterra Co-operative Bank." A long-standing opponent of Fonterra's abandoned plans to list on the stock exchange to raise capital for growth, Mr Rimmington found it hard to believe the board could be so out of touch with its farmers."Ninety two per cent of Fonterra shareholders opposed the float." He said the new option, to offer members the chance to buy up to 20 per cent more shares, was better although he wondered what would happen after five years when Fonterra needed more cash. He supported co-operative analyst Alan Robb, who recently suggested Fonterra look at issuing perpetual bonds with annually reset interest rates that could attract investors. Mr Rimmington said Fonterra's salary structure was also due for review since chief executive Andrew Ferrier's $4 million salary triggered 16 other multi-million salaries.