What are PIBS?
A. Permanent Interest Bearing Shares – are relatively new on the scene. They are a form of debt issued by a Building Society and they behave much in the same way as company bonds behave. They are tradable on the Stock Exchange and can be bought and sold via a stockbroker, although many have not heard of them or care little for trading in them and therefore it could be difficult to quote a price. PIBS give holders share rights, but (and it is a big BUT) they may not be eligible to qualify the holder for allocation of shares in the event of a demutualisation – the jury are still out on that one. When First National Building Society demutualised it excluded PIBS holders of less than two years from qualifying for a windfall. As far as the carpetbagger is concerned, there is one distinct advantage – Being the holder of PIBS entitles you to open an account as an existing member. Another advantage with PIBS is their extremely favourable interest rate, often in excess of 12% per annum. However
