NI Presbyterian mutual society, Short of funds for withdrawal?

crazymess

Just another thought - picked this up from a blog:

But it seems strange that the national press and media haven’t really picked up the story of perhaps the only UK financial institution that is being allowed to fail in this crisis. Even UK investors in Icelandic banks (somewhat outside the FSA’s normal remit) were rescued by the UK government. Yet PMS is only failing due to the UK government’s protection of other institutions.
Despite this, the plight of PMS barely gets a column inch in the national press, and doesn’t get an airing (that I’ve discovered) on financial programmes like Radio 5 live’s Wake up to Money or BBC Two’s Working Lunch.
But while the story just smokes in the corner, there’s no embarrassment for the government and no impetus for action. (Mere moral obligation doesn’t seem to be a motivator.)



Does anyone know if there are other financial institutions in the same boat as ourselves??? ie sitting, waiting and waiting for help!

Nomad25

This is why I am so opposed to 'silent protest'.

Money_Grabber13579

brick wrote: »

Is there an implication here that the monetary "insurance premiums" paid by financial institutions (to the "insurer") covers or exceeds HMG's cash injections and exposure?

My, admittedly not detailed, reading of the press coverage was that HMG would be taxing citizens heavily in order to underpin its recent flurry of huge commitments to (among others) those favoured financial institutions which it has elected to support.
If so, does this suggest that the collective premiums paid by financial institutions perhaps don't come anywhere near the amount which HMG is actually injecting?

Can anyone point to actual facts and figures?... which contrasts "premiums paid" with HMG's actual exposure?

I have no idea how much the favoured financial institutions, both individually and collectively, have actually paid.

I do know there is a cap/limit on my house insurer's liability, and if rebuilding costs exceeded that amount I would pay the extra... and not the insurer.

But there is a difference to the bail out's of banks that were near collapse, and the banks which actually did. With the banks that were near collapse, the government gave them money, in return for a share of the bank. With the banks that actually collapsed, i.e. Icelandic banks, all the other registered banks do have to fund this. The government or taxpayer does not pay for this directly. (Although they may do in lower savings rates)

PMS collapsed, so if they had been registered, all the other UK banks would have had to pay the savers compensation. The government would not have had to pay a penny. Therefore, by not being registered, the remaining banks don't have to pay out and neither does the government.

freddiemae

goodbyepci wrote: »

Money_Grabber13579
If HM government gives the PMS capital to the value of the savers money - say £314M
In effect the government would be "buying" PMS for the value of the assets last year.
The Directors and Secretary have assured us that the money has not "disappeared" but is tied up in the assets.

The savers could get all their money back immediately
The government could hang on to the assets 'till the market recovers and they return to their full value, maybe even exceed it again (as the government tell us?)

The government get their money back a few years down the line, and the more elderly savers will have the use of their hard earned savings now while they need them.

(and I think they may drop the clause about paying any surplus assets to the Home Mission Board of the Presbyterian Church in Ireland)


Thoughts?

The problem with this idea is "Moral hazard". The govt would be saying to directors of mutuals "Do what you like and we will bail out your shareholders". The next problem is that we already know that the PMS overpaid at the height of the boom for commercial property on the mainland. It could take many years before that property has any value again. There is a surplus of commercial property and the economy is contracting. Luckily the PMS have tenants in some of the property so it is not a total loss.
The biggest problem of all is the fact that you are shareholders not savers.
You felt you were savers with your church but legally you were shareholders in a mutual society. There are too many get out clauses for the UK govt. It could be used as a precedent for other mutuals yet to fail and for shareholders in the main banks who suffered almost total loss of their share value.
Dont get me wrong I still sympathise and will do all I can to help but I still feel the onus is on the Church which used you and your money and didn't take good care of either one.

expat68

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/05/cleaning_up_bankers_mess1.html

Interesting article which mentions role of building societies and mutuals in future.

expat68

Money_Grabber13579 wrote: »

But there is a difference to the bail out's of banks that were near collapse, and the banks which actually did. With the banks that were near collapse, the government gave them money, in return for a share of the bank. With the banks that actually collapsed, i.e. Icelandic banks, all the other registered banks do have to fund this. The government or taxpayer does not pay for this directly. (Although they may do in lower savings rates)

"After clashing with the Government last night, the IMF downgraded the total cost of the banking bailout to just over £130billion - or 9.1 per cent of national income. "

IMF estimate of UK banking bailout is £130billion. General point but lets not kid ourselves that the taxpayer is not paying for the banking bailout - we will all be paying for this for many years. The historic FSA contributions from the banks didnt even come close to paying for the bail out.

crazymess

The Directors and Comp Sec in the PMS - seem to have been operating as a bank - yet they were not even bankers

COMPLICATED:

We were given this answer when we asked why the PMS didn't go for regulation -

Toastandbutter

could the PMS pay back a Government loan? it is suggested above that they couldn't and this may be correct. But as I understand it the PMS has earned millions in rent from its sterling commercial properties since it went into administration.

I think in Jan the figure was something like £3-4 million since it went into administration.

Money_Grabber13579

goodbyepci wrote: »

Money_Grabber13579
If HM government gives the PMS capital to the value of the savers money - say £314M
In effect the government would be "buying" PMS for the value of the assets last year.
The Directors and Secretary have assured us that the money has not "disappeared" but is tied up in the assets.

The savers could get all their money back immediately
The government could hang on to the assets 'till the market recovers and they return to their full value, maybe even exceed it again (as the government tell us?)

The government get their money back a few years down the line, and the more elderly savers will have the use of their hard earned savings now while they need them.

(and I think they may drop the clause about paying any surplus assets to the Home Mission Board of the Presbyterian Church in Ireland)


Thoughts?

The problem is that the assets aren't worth anywhere near what they are on the balance sheet at. And lots of loans they have made are unlikely to get repaid, due to builders going bankrupt. So the government would get nothing in return for their investment, unlike other banks.

And besides, the labour government doesn't have a good record on selling assets for a good price!

fivealive_2

freddiemae wrote: »

The biggest problem of all is the fact that you are shareholders not savers.
You felt you were savers with your church but legally you were shareholders in a mutual society. There are too many get out clauses for the UK govt. It could be used as a precedent for other mutuals yet to fail and for shareholders in the main banks who suffered almost total loss of their share value.
Dont get me wrong I still sympathise and will do all I can to help but I still feel the onus is on the Church which used you and your money and didn't take good care of either one.

In the Administrator's letter dated 1st May he NEVER refers to us as share-holders or investors but refers 4 times to us as "members" and 4 times as "savers". So, I thought I was a SAVER, the Administrator thinks I am a SAVER but the law says I am a share-holder. Can anyone explain that?
In the Administrator's letter dated 6 Feb 09 he states "At that stage, (May 2009) it would be my intention to put a detailed proposal for an arrangement to you and ask you to vote on it."
However in his May 09 letter he says "I hope at this stage to be in a position to put that arrangement to you in September."
The man sounds a lot less certain about things now. I am not for one minute questioning this man's credibility or professionalism (which seems impeccable) I am just wondering has he discovered that the deeper he goes, the more complicated it gets and that it's a right old can of worms? We need to pray for Mr Boyd.