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PJ1977

Revisiting The Pms

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The collapse of the PMS was not something I took a great deal of interest in. (I wasn't living here at the time and I'm not a Presby.) I have recently had a look at the admins reports on the society so really anything I post here is more a case of thinking out loud, rather than any massive new insights.

The first thing I would say is that the PMS loan book was a shocker, an absolute shocker.

Here's why.

At Anglo - the developers bank - they had an informal policy of trying to keep development (as opposed to investment) loans to 15% of the book. By the end they'd thoroughly breached that and development land was about 25% of the book. Not good.

We turn to the PMS. A little table in the admin report tells us their total book at the end was £184m. The column for 'building sites and development land' reads £85m.

That's fully 46% of the book accounted for by development land.

But there's more. Another £26m was loaned for BTL - 14% of the book. A further £17m for commercial property - 9%.

I had naively thought the PMS would be a bit like a credit union: small advances for home improvements and loans to congregations to fix leaky roofs on Manses. However, only £12m was loaned to congregations (7%) and £11m for own homes (6%).

The people investing in the PMS probably didn't know it but they were basically funding a mono-line property lender with a whopping exposure to undeveloped land.

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The PMS is the Presbyterian ... something ... Society?

Sorry, I simply don't know. Please link.

And the republic is a state that unionists consider unsustainable - hehe!

Use google

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PJ, very interesting info, I had always wondered the extent of property speculation. The above seems nothing short of fraud. I still feel that the fairest outcome would be for those responsible to be prosecuted and the assets to be liquidated with the return of money without state supplementation.

Okcuckoo, unionist does not equal Presbyterian, and unionists don't consider the republic unsustainable. A very "them and us" comment.

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PJ, very interesting info, I had always wondered the extent of property speculation. The above seems nothing short of fraud. I still feel that the fairest outcome would be for those responsible to be prosecuted and the assets to be liquidated with the return of money without state supplementation.

Okcuckoo, unionist does not equal Presbyterian, and unionists don't consider the republic unsustainable. A very "them and us" comment.

Well, I'm in Kilkenny this week, where I presume they're not unionists, but unsustainability is seen more as a fact than an opinion. Are the EU and the IMF in cahoots with with the LOL?

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The sad thing was that the small savers were still being encouraged to put funds in up to the end -- they were told that the PMS did not speculate with their funds. They were lied to.

.....involving certain "old friends of the forum".

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.....involving certain "old friends of the forum".

I wouldnt mind reading the admins report. Is it published on line? I read the report of the Commons Committee and was astounded at the apparent incompetance. There is tremendous spin put on all of this as well for political reasons. The "saving" structure was quite interesting with shares actually being bought. The shareholders v savers issue is only mentioned in the less emotive columns.

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The sad thing was that the small savers were still being encouraged to put funds in up to the end -- they were told that the PMS did not speculate with their funds. They were lied to.

In fairness, people involved with PMS needed to do more due diligence. Just because commercial banking enterprises hadn't failed in such a long time, people assumed you could simply put your money in the likes of PMS, Icesave, Anglo Irish bank, etc. with no risk. The reality with bank deposits is that when you put money into them, you become nothing more than creditor and if the bank sustains enough losses, then you will take your lumps (as will equity and bondholders). People simply got too greedy, sacrificing the return of their investment for a poxy 1-2% return.

It's like Warren Buffett says. If you offered someone a gun with 100 chambers, put a bullet in just one of those chambers; there isn't a price you should accept to pull the trigger. In my opinion, PMS members ignored the warnings and pulled the trigger on themselves.

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In fairness, people involved with PMS needed to do more due diligence. Just because commercial banking enterprises hadn't failed in such a long time, people assumed you could simply put your money in the likes of PMS, Icesave, Anglo Irish bank, etc. with no risk. The reality with bank deposits is that when you put money into them, you become nothing more than creditor and if the bank sustains enough losses, then you will take your lumps (as will equity and bondholders). People simply got too greedy, sacrificing the return of their investment for a poxy 1-2% return.

It's like Warren Buffett says. If you offered someone a gun with 100 chambers, put a bullet in just one of those chambers; there isn't a price you should accept to pull the trigger. In my opinion, PMS members ignored the warnings and pulled the trigger on themselves.

Well, yes, but they didn't expect a church associated outfit to run riot like that. Turned out the association was very limited. A lot of the folks burned seem to have been of fairly modest means.

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Well, yes, but they didn't expect a church associated outfit to run riot like that. Turned out the association was very limited. A lot of the folks burned seem to have been of fairly modest means.

Bernie Madoff was incredibly well respected, and the toast of Jewish high society. Nobody ever expected that he could be an embezzler either.

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I have no connection or savings with the PMS but I feel that the small saver was lied to by their Directors of PMS, let down by the Church that used their money and then abandoned them. and were screwed by a govt dept that should have been overseeing the accounts and chose to just look away.

Many of these elderly people have had little money for fuel or rates bills since the DWpensions considers that they still have the money they cannot access and they don't qualify for benefits as a result.

Investors like Eric Cairns could do due diligence but many of these older people trusted their church and their minister thinking they were using their savings to benefit their church and mission. I hope the Presbyterian church, Arlene Foster and her dept, the Directors and officials of PMS are all proud of themselves.

+1!

rock on!

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I have no connection or savings with the PMS but I feel that the small saver was lied to by their Directors of PMS, let down by the Church that used their money and then abandoned them. and were screwed by a govt dept that should have been overseeing the accounts and chose to just look away.

Many of these elderly people have had little money for fuel or rates bills since the DWpensions considers that they still have the money they cannot access and they don't qualify for benefits as a result.

Investors like Eric Cairns could do due diligence but many of these older people trusted their church and their minister thinking they were using their savings to benefit their church and mission. I hope the Presbyterian church, Arlene Foster and her dept, the Directors and officials of PMS are all proud of themselves.

It's useful to remind ourselves that even though the crisis of the PMS was one of liquidity (ie. people wanted their money back but the PMS couldn't come up with it because even back in 2007 they only had about £10m in what might be called their core capital versus illiquid property assets of £280m) it was well on its way to a crisis of solvency given its property exposure.

There was obviously a problem with regulation but frankly the responsibity lay with the directors who were miles out of their depth. The ballooning balance sheet between 2006 and 2008 alone is hair raising.

Also given the mutual nature of the outfit its risk structure for investors was brutal. Put in up to £20k and that's equity so it will all be wiped out in event of insolvency. Everything over £20k and you were making a loan to the PMS so became a creditor in event of insolvency. So - small investors were guaranteed a 100% wipeout while the more money you had in the less in percentage terms faced a guaranteed wipeout.

This is also intriguing from the admin:

"The Administrator has issued legal proceedings against a number of parties involved in several loans which were made available to one of the Society's borrowers. The Administrator believes that the Society suffered a loss as a consequence of the actions of the parties involved but is unable to comment any further on these proceedings at this stage."

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It's useful to remind ourselves that even though the crisis of the PMS was one of liquidity (ie. people wanted their money back but the PMS couldn't come up with it because even back in 2007 they only had about £10m in what might be called their core capital versus illiquid property assets of £280m) it was well on its way to a crisis of solvency given its property exposure.

There was obviously a problem with regulation but frankly the responsibity lay with the directors who were miles out of their depth. The ballooning balance sheet between 2006 and 2008 alone is hair raising.

Also given the mutual nature of the outfit its risk structure for investors was brutal. Put in up to £20k and that's equity so it will all be wiped out in event of insolvency. Everything over £20k and you were making a loan to the PMS so became a creditor in event of insolvency. So - small investors were guaranteed a 100% wipeout while the more money you had in the less in percentage terms faced a guaranteed wipeout.

This is also intriguing from the admin:

"The Administrator has issued legal proceedings against a number of parties involved in several loans which were made available to one of the Society's borrowers. The Administrator believes that the Society suffered a loss as a consequence of the actions of the parties involved but is unable to comment any further on these proceedings at this stage."

That last bit is very interesting indeed.

A number of parties and one borrower!

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I have no connection or savings with the PMS but I feel that the small saver was lied to by their Directors of PMS, let down by the Church that used their money and then abandoned them. and were screwed by a govt dept that should have been overseeing the accounts and chose to just look away.

Many of these elderly people have had little money for fuel or rates bills since the DWpensions considers that they still have the money they cannot access and they don't qualify for benefits as a result.

Investors like Eric Cairns could do due diligence but many of these older people trusted their church and their minister thinking they were using their savings to benefit their church and mission. I hope the Presbyterian church, Arlene Foster and her dept, the Directors and officials of PMS are all proud of themselves.

Just curious as to what the dividends/interest was on investments?

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That last bit is very interesting indeed.

A number of parties and one borrower!

Anyone like to hazard a guess? He used to be considered a good egg until the wind changed - now he's not as ridge as he was.

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Anyone like to hazard a guess? He used to be considered a good egg until the wind changed - now he's not as ridge as he was.

Thats who I thought of but have no idea as to the factual basis of the rumours. In fact I have not even heard a good reliable rumour, just whispers.

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Plenty more here from the Newsletter on the alleged failings of the directors. I wonder if they are also the people being pursued in the case mentioned above.

http://www.newsletter.co.uk/news/PMS-directors-face-legal-move.6630621.jp

In some ways it better had be the same directors as surely there cannot be so much cr#p about to cover a different bunch.

So DETI are considering Disqualification action but what can the Administrator do? Sue for money? Anything else would be pointless unless he has a legal obligation to report something like fraud, but that is not the same as the Admins actually taking legal proceedings.

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If the alleged parties are professional people then they will have professional insurance the administrator could call on.

The quote from the Administrator refers to "a number of parties". They are not identified as directors and could conceivably be outsiders such as lawyers or valuers. There could easily be two groups of people in the frame.

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In this article in the Newsletter they are described as "directors"

http://www.newsletter.co.uk/news/PMS-directors-face-legal-move.6630621.jp

An annex of the DETI letter accuses the director of a number of misdemeanours, including causing or allowing the PMS to:

* Carry on the business of banking contrary to the Industrial and Provident Societies Act.

* Accept deposits as a deposit-taking business in breach of the Banking Act 1987 and I&PS Act 1969.

* Carry on a regulated activity, namely accepting deposits, without authorisation under Financial Services and Markets Act 2000.

* Making loans to non-PMS-members in breach of PMS rules.

* Failing to ensure the directors met sufficiently often to control PMS affairs.

* Pursuing investment/lending policies not consistent with PMS rules.

* Having a director who was not a member of the PMS.

* Allowing non-members to borrow money.

* Allowing non-Presbyterians to invest.

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In this article in the Newsletter they are described as "directors"

http://www.newsletter.co.uk/news/PMS-directors-face-legal-move.6630621.jp

Yes the DETI action is against directors but the legal proceedings by the Administrator are against "a number of parties".

I notice the non Presby thing above highlighted. Is this a major issue I wonder?

Edited by Bill Poster

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I think you had to have a live presbyterian church connection to join initially before they threw away the rule book

It's a tale of Greed and the Great and the Good. Perhaps there is a movie title in there somewhere. Fascinating. Provided one is on the outside of course.

I found the Commons Report very interesting, the same report that Arlene is quoted as saying was a shoddy piece of work, or words to that effect.

I have not in the past followed the work of the DETI but wonder if the publicity they allow in this case is any different to their normal. To be fair usually the first thing to be release by them is "Ahoghill Director agrees to disqualification" for example.

It seems that every other press release, and by that I mean about half of them, begins with the word Foster.

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Can't post a link but the BBC are reporting an average 77p in the £ bailout offer.

So remember if you lose a few quid on the National this weekend make sure you ask for a bail out just like the one the PMS gamblers got.

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Can't post a link but the BBC are reporting an average 77p in the £ bailout offer.

So remember if you lose a few quid on the National this weekend make sure you ask for a bail out just like the one the PMS gamblers got.

Must be the first time the words "gambler" and "Presbyterian" appeared in the same sentence. In fairness, I've met two people who lost money on this - one is a retired farmer, the other a clergyman's widow. Those wild desperados.

Thank heaven no one thought to bail out RBS, Anglo Irish, the newly Unfree State, Portugal etc

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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