Derbyshire BS & PIBS

Hi,

I recently purchsed some Derbyshire PIBS for my SIPP and ISA. Reason (it seems maybe wrong), I thought the DBS was a local, mutual BS proving local mortgages from local savers. Hence pretty safe. I also understand that no BS has ever missed a payout on PIBS; also the yield was decent. Also PIBS "should" be ideal when moving the SIPP into drawdown for a regular retirement income.

Now DBS (also Chesire BS) will be taken over by Nationwide on Dec 01 (per announced plan - with no member vote and no windfall). It also seems they "may" have been dabbling in American mortgages and "may" be in a bit of trouble.

Your thoughts please on:

  1. How safe is my principal (it's not gov't secured like plain, old savings accounts.)
  2. How likely are the scheduled interest payouts from the PIBS.

As I persuaded my ex-wife to also do this, acting as her financial adviser, I'm a bit concerned. Crikey, it seems even the apparantly safe investments may not be.

I will call DBS tomorrow for thier words on this. Thanks in advance.

Jim.

Reply to
Jim
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Not yet, but the Bradford & Bingley ones could default very soon. Possibly as early as tomorrow morning.

Never mind American mortgages. British ones are potentially even worse, as they are secured on properties that are even more over-valued.

Not at all safe, even if Nationwide is financially sound. You can either guarantee the income or the capital, not both. PIBS guarantee the income. If interest rates go up, the value of your PIBS will go down.

I don't think you will have any problems receiving them.

They will tell you everything is fine. Do you trust them?

Reply to
Jonathan Bryce

Hmmm, very interesting. I always knew that PIBS were like preferred shares- with pecking order only slightly better than common shareholders in the event of belly-up. Did Northern Rock have any PIBS (actually called permanent subordinated bonds for non-mutuals) out there ? What's happening ??? Too early to tell ???

Understood from when I made the investment that the principle value vaies inversely with interest rates.

Are you saying that when Nationwide takes over, they will likely keep paying out the interest, but the principal value is hard to determine? Hence difficult to trade. I would hope (and expect) they would be converted into Nationwide PIBS and be easily tradeable.

Definately not. A few months ago B&B told everybody they were fully funded for 18 months. Will the people making those statements be held to account ? - I doubt it. They will also probably get million pound "golden goodbyes". RememberMr Appelgarth at Northern Rock - definately a rotten apple.

Who regulates the regulators ? This reminds me of (in Tinker Tailor Soldier Spy), "who spies on the

Jim

Reply to
Jim

Update:

After speaking to the Derbyshire this morning, I feel a good bit better. Interest will be paid. On Dec 01 they will become Nationwide PIBS. It seems I may have got away with ths one. I notice the value has recovered a bit.

Now for my other PIBS - the West Bromwich Building Society which has just had its credit rating downgraded, mainly due to "diversifying into Buy to Let". This could be worse than Derbyshire. Its price has been in freefall.I only hope Nationwide take over this one as well.

They all make me damned mad. They have all been hiding their real state which seems to sound worse every day. Eventually the truth comes out.

Jim

Reply to
Jim

I bought West Brom PIB's for my self select ISA around February of last year at 90p, Down to 66p last week. I asked on this NG and another recently why they were falling but no responses.

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Derek.

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Reply to
DerekF

Well all you guys who like to hoard money and get large interest payback on it deserve all you get . I got a good many shares when B&B floated but unlike quite a few idiots that hung on to theirs and are feeling sorry for themselves today I cashed in mine when I got my hands on them and made a killing. There is only one place to keep cash these days and that is in a safe or under the bed at home .

Reply to
mymail

Because interest rates have gone up since then, and because West Brom is perceived to be more risky than it was then.

Reply to
Jonathan Bryce

The building society doesn't promise to repay the PIB at any point. They promise to pay you an amount of money every 6 months, and that stream of income has a value that you can sell on. How much someone will be willing to pay to purchase this stream of income depends on interest rates, and how likely they think it is that the building society will go bust and not pay.

Reply to
Jonathan Bryce

Please send your address so that we can clear the mess from under your bed. Derek.

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Reply to
DerekF

The West Brom PIB's have a redemption date of 2021. Derek.

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Reply to
DerekF

Bitstring , from the wonderful person DerekF said

This is the new definition of 'Permanent' then??

Reply to
GSV Three Minds in a Can

There are dated and undated Gilts. Derek.

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Reply to
DerekF

Bitstring , from the wonderful person DerekF said

Sure there are, but the undated ones are not called 'irredeemable'. My points was that the P in PIB stands for 'Permanent'

Reply to
GSV Three Minds in a Can

Bitstring , from the wonderful person GSV Three Minds in a Can said

Ooops, the DATED ones are not called 'irredeemable'. 8>.

Reply to
GSV Three Minds in a Can

Your PIBS is worth exactly as much as you can sell it for. There has never been any guarantee of the principal.

They will be liabilities of the Nationwide.

Reply to
s_pickle2001

As a point of interest I asked Northern Rock the situation on their PIB's They replied:- The PSNs were originally the Permanent Interest Bearing Shares (PIBs) which were taken on by the Northern Rock Building Society in 1994 following the merger with the North of England Building Society. Following the conversion of Northern Rock from a building society to a plc in 1997 the PIBs became PSNs.

As you will be aware on the 22 February 2008, pursuant to the Northern Rock Plc Transfer Order 2008 (the Transfer Order) made under the Banking (Special Provisions) Act 2008 (the Act), a nominee of HM Treasury, the "Treasury Solicitor", acquired all the issued ordinary and preference share capital of the Company at 00.01 on 22 February 2008. As such, the Company has passed into temporary public ownership (TPO).

The PSNs, were not acquired by the Treasury Solicitor, they remain outstanding following TPO, and the Transfer Order and the Act do not specifically amend their terms. The PSNs continue to trade openly on the London Stock Exchange, however given the current general market conditions they may be less liquid. Northern Rock is not permitted to provide you with any investment advice or a quote on these however a stock broker should be able to assist you.

The recent announcement by HM Treasury appointing BDO Stoy Hayward as an independent valuer has no impact on the PSN. BDO Stoy Hayward will only be assessing any compensation that may be payable on those ordinary and preference shares which were acquired by the Treasury Solicitor Derek.

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Reply to
DerekF

Hmmm, interesting response.

The key would be "are they continuing to make the interest payments ?" Do you know?

I was planning on basing my retirment fund partly on PIBS (inside drawdown) instead of an annuity. Now it seems I should look at alternatives as my PIBS have just been beaten to death by:

  1. higher interest rates
  2. Percieved risk

My Derbyshire should be OK - will become Nationwide. My West Bromwich remain at a bit vulnerable.

Have a great weekend.

Reply to
Jim

Been searching my records on West Brom and came up with their prospectus:

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If West Brom are taken over it would seem that the PIBs would become those of the society taking over. I also did an E-Mail today to the FSA asking in general terms what happens if a society is taken over. Hope you don't have as many as I bought:-) Derek.

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Reply to
DerekF

The interest payments on the former Debyshire PIBS are now Nationwide's liabilities. As long as NW is solvent, they have to make payments. (There may be a clause that they don't have to pay if the society failed to make enough profit to cover the interest payments.)

Presumably you or you financial adviser considered the risks of investing in PIBS.

Reply to
s_pickle2001

Hi Jim,

I'm interested in investing in PIBS via an ISA but I can't find anyone to one up for me. May I ask who you set up yours with?

Regards,

Nigel

Reply to
nigel

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