Chapter CTM49480

Published date16 April 2016
Record NumberCTM49480

Building societies are allowed to issue PIBS as a means of strengthening their capital base. A PIBS is a share which is a permanent interest bearing share for the purposes of the General Prudential Sourcebook made by the Financial Services Authority (FSA) under the Financial Services and Markets Act 2000.

To qualify as PIBS, the shares must have the following characteristics:

  • Permanence. There can be no repayment with the exception of winding-up or with the consent of the FSA.
  • Interest bearing. The rate may be fixed or may vary by reference to market rates, and not directly related to the society’s profits.
  • Non-cumulative. Investors lose the right to any interest that is passed.
  • The payment of interest can be passed or abated if the society’s capital position would otherwise be impaired.
  • The writing down of the outstanding principal can absorb losses.
  • Rank behind ordinary building society shares on a winding-up.
  • Become...

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