Ulster Bank is planning to switch the loans of under-pressure dairy farmers to interest-only and advance them extra capital as the industry continues to struggle due to milk price swings.

This should serve to take cashflow pressure off members.

The bank's new chief executive Gerry Mallon told the Irish Independent that it will work with customers in agriculture who have been hit by falling milk prices to help them ride out the effects of the short-term volatility.

The Irish Farmers' Association (IFA) has welcomed the move.

Mallon said:

"This is my second milk price crisis and the key is to look through the cycle.

"As a bank, you have to hold your nerve."

Milk prices have fallen by as much as 40% over the past couple of years, forcing dairy farmers to sell below the cost of production.

A major lender to the farming sector, Ulster Bank was criticised earlier this year for including roughly €100m in farm loans in a group of problem assets that were being put up for sale.

Mallon has insisted that any sale would not include the debts of farmers and affirmed his bank's commitment to such customers.

"Farmers have long memories. Where necessary, we provide additional working capital and move loans to an interest-only basis.

"Our key message is to encourage farmers to engage with the bank."