Derbyshire BS & PIBS


J

Jim

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.
 
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J

Jonathan Bryce

Jim said:
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.
Not yet, but the Bradford & Bingley ones could default very soon. Possibly
as early as tomorrow morning.
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.
Never mind American mortgages. British ones are potentially even worse, as
they are secured on properties that are even more over-valued.
Your thoughts please on:
1. How safe is my principal (it's not gov't secured like plain, old
savings accounts.)
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.
2. How likely are the scheduled interest payouts from the PIBS.
I don't think you will have any problems receiving them.
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.
They will tell you everything is fine. Do you trust them?
 
J

Jim

Not yet, but the Bradford & Bingley ones could default very soon. Possibly
as early as tomorrow morning.
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 ???
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.
Understood from when I made the investment that the principle value
vaies inversely with interest rates.
I don't think you will have any problems receiving them.
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.
They will tell you everything is fine. Do you trust them?
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
 
J

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
 
M

mymail

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.
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 .
 
J

Jonathan Bryce

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

Jonathan Bryce

Jim said:
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.
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.
 
G

GSV Three Minds in a Can

from the wonderful person said:
The West Brom PIB's have a redemption date of 2021.
This is the new definition of 'Permanent' then??
 
G

GSV Three Minds in a Can

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

GSV Three Minds in a Can

from the wonderful person said:
Sure there are, but the undated ones are not called 'irredeemable'.
Ooops, the DATED ones are not called 'irredeemable'. 8>.
 
S

s_pickle2001

Hi,

I recently purchsed some DerbyshirePIBSfor 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 onPIBS; also the
yield was decent. AlsoPIBS"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.)
Your PIBS is worth exactly as much as you can sell it for. There has
never been any guarantee of the principal.
2. How likely are the scheduled interest payouts from thePIBS.
They will be liabilities of the Nationwide.
 
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J

Jim

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.
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.
 
S

s_pickle2001

Hmmm, interesting response.

The key would be "are they continuing to make the interest payments ?"
Do you know?
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.)
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.
Presumably you or you financial adviser considered the risks of
investing in PIBS.
 
N

nigel

Jim said:
Hi,

I recently purchsed some Derbyshire PIBS for my SIPP and ISA.
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
 
D

DerekF

nigel said:
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
I have PIBs in a self select ISA with Redmayne Bentley.
Derek.
 
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