Permanent interest bearing shares
Encyclopedia
In finance, permanent interest bearing shares, or PIBS, are fixed-interest securities issued by building societies. PIBS become perpetual subordinated bonds if their issuer demutualises. Building societies use them in the way public limited companies use preference shares. Although similar to bonds
, PIBS typically exist as long as their issuer does.
Many PIBS were originally issued in an era of higher interest rates, and so appear attractive to investors looking for income in a world of lower interest rates. However, there are some disadvantages to PIBS; unlike bonds they have no fixed redemption date, so the buyer is at the mercy of the markets when s/he wants to sell. Also, PIBS are not covered by UK government compensation schemes, interest does not 'roll up' - if a payment is missed, it is gone for good - and they rank behind depositors and other members in the event of financial distress.
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
, PIBS typically exist as long as their issuer does.
Many PIBS were originally issued in an era of higher interest rates, and so appear attractive to investors looking for income in a world of lower interest rates. However, there are some disadvantages to PIBS; unlike bonds they have no fixed redemption date, so the buyer is at the mercy of the markets when s/he wants to sell. Also, PIBS are not covered by UK government compensation schemes, interest does not 'roll up' - if a payment is missed, it is gone for good - and they rank behind depositors and other members in the event of financial distress.
External links
- Building Societies AssociationBuilding Societies AssociationThe Building Societies Association is the trade organisation of the building societies in the United Kingdom. In 2011 the 48 building societies in the UK had total assets of over £317 billion. 15 million adults have building society saving accounts and over 2.9 million adults are currently buying...
- What are PIBS? - Permanent interest bearing shares
- PIBS (permanent interest bearing shares)
- The Daily TelegraphThe Daily TelegraphThe Daily Telegraph is a daily morning broadsheet newspaper distributed throughout the United Kingdom and internationally. The newspaper was founded by Arthur B...
- If you're looking for an income in retirement, check out Pibs - Investors ChronicleInvestors ChronicleThe Investors Chronicle is a weekly magazine in the United Kingdom for private investors and is published by the Financial Times Group. The magazine publishes articles about global markets and sectors, and news on corporate actions such as takeovers and share issues...
- Guide to investing in Pibs