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Lloyds to buy farm mortgage specialist

LLOYDS BANK is to buy the Agricultural Mortgage Corporation, the specialist lender in which the Bank of England has a 27.4 per cent stake. The price for the 86.7 per cent Lloyds does not already own is pounds 27m, writes Peter Rodgers.

The AMC was set up by statute in 1928, and has been jointly owned since then by the main clearing banks, including Lloyds, and the Bank of England.

With farmers expressing concern that interest rates will rise when the AMC comes under single ownership, Lloyds said it was a condition of the sale that the organisation would be run as an independent company under its existing name.

The AMC provides competitively priced loans for 12,000 farmers, foresters and horticulturalists. But with just under pounds 1bn out on loan, it has only 9 per cent of the UK agricultural finance market of pounds 12.6bn. The acquisition will more than double Lloyds' existing share of 7 per cent.

Profits in the year to last March were pounds 7.8m. The price Lloyds is paying values the AMC at 60 per cent of net asset value last March of pounds 52m. Finance businesses normally change hands for at least net asset value.

But one shareholder said the AMC was not as cheap as it looked because of uncertainty over the future of the agricultural sector and an erratic profits record over the years. 'It has never been a very good investment for us,' the shareholder said.