Manchester BS PIBS payments under threat due to capital position
Manchester Building Society predicts that it will not meet the qualitative standards for the level of CET1 regulatory capital, and as a result will not be able to pay its Permanent Interest Bearing Shares coupons scheduled for October.
In its interim results, the Directors also reported an expected loss for the first six months of 2016, "largely due to professional costs incurred in exploring options to secure the future of the Society" given its CET1 regulatory capital position and the ongoing run-off of the balance sheet.
In addition, the Society has continued to incur costs in pursuing its claim against Grant Thornton LLP, the Society's previous external auditors.
The directors expect that as at 30 June, the Society will have met its Individual Capital Guidance set by the PRA and maintain that its liquidity position remains strong.
In March, directors admitted a "material uncertainty" surrounding the long-term future of the Society due to a continuing decline in the scale of operations.
The Society confirmed that it has 'no plans to re-enter the mortgage market in the immediate future'.
It has not been active in the lending market since 2013 and its mortgage assets have reduced by approximately 40% over the last three years.
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