More misery for Manchester Pibs holders

Investors who own permanent interest-bearing shares or Pibs issued by Manchester Building Society are to miss out on another interest payment, the mutual has indicated.

The embattled society, which has said there is “material uncertainty” over its survival, has two tranches of Pibs in issue: one that is supposed to pay 8pc annual interest and another with a 6.75pc “coupon”. Investors have already missed the interest payments due in April this year and October 2016.

Announcing its half-year results on Thursday, when it said that losses had fallen to £698,000 from £1.4m for the same period last year, the mutual added: “On March 14 2017, the society announced that there was uncertainty over its ability to make coupon payments on its two tranches of Pibs after April 2017 given the risks facing the business.

“This uncertainty continues and while no decision has been taken regarding the October 2017 coupon payments presently, its payment is unlikely at this time. Any further non-payment of Pibs coupons will be announced to the market.” The loss arose from a £1.7m “impairment” charge on costs “related in the main to an increase in the insurance risk on the Spanish loan book”.

Investors who decide to sell their Pibs in the market face crystallising severe losses.

The 8pc issue was trading at 27.25p on Thursday after the latest announcement, while the 6.75pc Pibs were priced at 20.5p.

The society said it was in “open dialogue” with regulators over its plans to strengthen its finances.