John Hemming, the MP who exposed Ryan Giggs’ super injunction in the House of Commons, has launched a campaign to help investors hit by Bank of Ireland’s decision to buy back its bonds for a fraction of their value. (1)
Hemming is one of group of investors (2) who bought a permanent interest bearing security (Pibs) from Bristol & West building society in 1991. The bond, which pays an interest rate of 13.375% (3) became Bank of Ireland’s responsibility when it bought Bristol & West in 1997.
Under the terms of proposals issued by the bank this week to raise €4.2 billion (£3.7 billion) these bondholders are being offered a 'haircut' of just 20% of their investments’ face value of £75 million, or the chance to swap the bonds for new shares worth only 40%. Hemming, the Liberal Democrat MP for Birmingham Yardley, said the move was unfair (4) to the bondholders, many of whom he believed were pensioners. (5)
1) Isn't it refreshing to know that there are some MPs who are prepared to make a stand? To do and say things out of principle and not just because they are tireless self-publicists or acting out of naked self-interest?
2) ... ah, right.
3) I've no idea when they stopped paying that tasty 13.375% interest, but unless it was more than ten years ago, all these investors have already had their money back!! Their original gamble paid off - not as well as hoped, admittedly, but hey.
4) And why is it not "unfair" to expect the taxpayer to chip in?
5) There's never a wrong time to play the "poor widows in mansions" card, is there?
I suppose the only glimmer here is that he wants the actual investors to be compensated, which is a far less bad way of doing it that fire hosing several £ billion at the bank itself and asking them to play nicely in future.
Friday, 10 June 2011