Manchester Building Society fails to pay Pibs again
EMBATTLED Manchester Building Society has confirmed that as expected it will not be paying the interest due on its permanent interest-bearing shares or Pibs, having also failed to pay in March and last October.
The Pibs are not cumulative so even if regular payments resume in the future, investors will not receive the missed instalments.
The building society posted a £698,000 half year loss to the end of June (2016: -£1.4m) and had £336m of assets. Total operating income stood at £4.8m for the half year (2016: 4.5m).
The missed payments are because its losses have given the society a regulatory capital shortfall against the requirement set by the Prudential Regulation Authority (PRS).
It added that despite its improving financial position, there is uncertainty over its ability to make future PIBS coupon payments due.
The society continues to discuss and consult with the PRA on its strategic future and capital position.
Manchester Building Society was founded in 1922 and has one branch on Queen Street. It has around 4,000 mortgage borrowers, as well as about 18,000 savings accounts but has not been active in the lending market since 2013 and has has no plans to re-enter the mortgage market. Mortgage assets have reduced by approximately 40% over the last three years.
It is in the throes of a £49m legal claim for damages against its previous auditor Grant Thornton and if the matter progresses to trial, it will not be before 2018.