The UK Shareholders’ Association has warned IFAs to expect some unhappy investors after Bradford & Bingley revealed several of its bonds will not be paying out dividends this month.
Last week, the Government revealed that several subordinated debts issued by B&B would not be paying out dividends.
This move, made legal in the 2009 Banking Act, allows the nationalised bank to defer payments on its subordinated debt. But the UKSA has reacted ang-rily, arguing that the Government has ignored the plight of about 1,700 private investors.
A spokesman says: “Neither B&B nor the Government gave any explanation as to why shareholders would not be recei- ving dividends this month. Many pensioners relied on this income.”
Some holders of these shares were initially holders of B&B’s permanent interest-bearing shares. After its demutualisation, these were converted into subordinated debt. UKSA is concerned that they will have to wait until B&B is wound up before they would be paid off.
He says: “The wind-up might take the Government 20 years and many of the investors will be dead by then. Advisers might have a tough time if they get calls from angry investors. These were supposed to be safe investments and advisers may have recommended them as just that in the past.”
