Holders of £370m of permanent interest bearing shares (PIBS) issued by the Co-op and Britannia Building Society before its takeover are expected to have their coupons cancelled, making them effectively worthless.
About £60m of PIBS are held by members of the public, paying interest annually of between 5.5pc and 13.5pc a year. PIBS are typically owned by pensioners, attracted by the steady guaranteed income.
A nice example of why it\’s good to have shareholders. Because they take that first chunk of losses.
You may recall that Richard Murphy was spluttering into his tea at one point about how appalling it was that the Co Op board were not considered proper bankers by the authorities. Insisted that these were exactly the people we needed to find a new method of banking.
As it turns out they\’ve done a Fred Goodwin. Crippled the bank by buying another without doing proper due diligence into the losses hiding inside that second bank.