Northern Ireland

Presbyterian Mutual Society: £25m bailout unlikely to be repaid

The Presbyterian Church's Assembly Buildings in Belfast Image copyright Benkrut
Image caption The Presbyterian Church made a £1m loan to the PMS and it too is unlikely to be paid back

Stormont funds of £25m that were used to bail out savers in the failed Presbyterian Mutual Society (PMS) are unlikely to be paid back.

The PMS went into administration at the height of the financial crisis in 2008.

Its members were partially bailed out with £225m of public money, which included a £25m interest-free loan from Stormont.

It was to be repaid if the PMS's assets recovered sufficiently in value but that has not happened.

Some larger investors in the PMS also face substantial losses as it is unlikely there will be money to make deferred payments to them.

The bulk of the state bailout - £175m - is being repaid through annual instalments and is likely to be settled in full by November 2020.

Lost access to savings

The rest of the bailout was in two £25m tranches - one treated as grant expenditure and the other that was intended to be repayable.

A note in the Department for the Economy's accounts states that the "interest-free loan of £25m is unlikely to be recovered" and its value has been written down to £0.

Image caption Rev Trevor Gribben said the Presbyterian Church hopes more money will be available for PMS investors

The society was forced into administration after a run on withdrawals when members realised it was not covered by new government deposit guarantees.

Nearly 10,000 Presbyterians lost access to their savings.

The bailout allowed for smaller savers, who invested less than £20,000, to get almost all of their money back in 2011.

Larger investors got 85% of their funds, with the remaining 15% deferred, dependent on the disposal of PMS properties and other assets.

The latest accounts of the PMS put those deferred sums at almost £47m.

'Hope for investors'

The Presbyterian Church also made a £1m loan to the bailout and it too is unlikely to be paid back.

The latest accounts of the PMS say: "Currently there is no repayment anticipated to any other class of long-term creditor, other than Department for the Economy, and it is not considered likely that this position will materially change within the period to November 2020."

Rev Trevor Gribben, the clerk of the General Assembly of the Presbyterian Church, said the church still hopes there will be more money for the investors.

Image caption Some larger investors in the PMS face substantial losses

"When that court-approved scheme was set up eight years ago, it was designed to ensure that smaller PMS savers, many of whom were vulnerable, would receive almost all of their savings back and the scheme has enabled that to happen," he said.

"This was only possible through UK government loans of some £225m."

'No scheme extension'

He added: "As a denomination, and recognising that many of our members were greatly affected by the collapse, the Presbyterian Church contributed a loan of £1m to the scheme.

"At the time, the church always recognised that its £1m loan would be the very last repayment to be made, acknowledging that it was more important for savers to receive the remainder of their investment at the end of the ten-year period.

"While we recognise that a substantial proportion of the government loan had to be repaid first, and we are led to believe that it is on course to being repaid, we would hope that there still would be some payments by the end of the wind-up scheme in 2021 to those savers who still have not received all of their investment back."

The Department for the Economy said the decision to bail out the PMS was taken by the government and it was considered the preferred route "to maximise the return to shareholders and depositors".

It also said there was no plan to extend the duration of the bailout scheme.

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