All investors in the ill-fated Presbyterian Mutual Society (PMS) would get the vast majority of their money back under a multimillion-pound British government rescue package proposed today.
Under the bail-out plan, the Stormont Executive, the UK Treasury and the Presbyterian Church would all stump up funds to help the 10,000 PMS investors hit when the Northern Ireland-based society went under at the height of the financial crisis two years ago.
The deal was tabled by First and Deputy First Ministers Peter Robinson and Martin McGuinness, but must get British Treasury approval before being implemented.
Mr McGuinness said: “Our proposals to resolve the problems of PMS will call for more direct intervention from government to provide conditions that will satisfy the demands of creditors of PMS and respond with practical help to deal with hardship experienced by small savers.”
While the Stormont blueprint has not been made public, it is understood that investors will get most, if not all, of their money back under its terms.
The ministers are seeking a meeting with Prime Minister Gordon Brown this week and they are keen to get the matter nailed down before parliament is dissolved ahead of the general election.
When the PMS hit the rocks, members were not afforded the same guarantee on their deposits as customers in troubled banks. The Government made the distinction between what it termed “investors” in a mutual society, which was not regulated by the Financial Services Authority (FSA), and “savers” in high street banks.
Under the plan by Mr Robinson and Mr McGuinness, the PMS - which is currently in the hands ofadministrators - would be run down in an orderly manner over the period of about five years.
During this time members would have access to their funds and would also be able to retain them in their account.
It is believed the majority of the rescue package would be funded by the Executive, with the Treasury also making a significant contribution. The Presbyterian Church, which has no direct link to the PMS, will be asked to stump up a smaller amount.
The proposals come after administrator Arthur Boyd failed to find a buyer for the society and in the wake of a High Court ruling which said only members with more than #20,000 in their accounts would be eligible for interim payments from a £20 million pot of assets already sold off — and even they would only get 12p for every pound invested.
Mr Robinson said he and Mr McGuinness would now press Mr Brown to sign up to the new deal.
“Decisions taken recently in the High Court mean that small savers in the PMS cannot be treated as creditors and will therefore not benefit from the early distribution of monies,” he said.
“In light of this judgment, we are keen to bring forward an alternative solution as quickly as possible.
“The acquisition of the PMS by a financial institution had been our preferred option.
“We now however feel that this option has been fully exhausted given the absence of firm proposals from any financial institution after several months of investigation. We are therefore increasingly anxious to explore other options.
“The deputy First Minister and I have formulated alternative proposals and submitted them to the Prime Minister and the Treasury. These proposals will form the basis of our meeting.” Mr McGuinness added:
“We are acutely aware that the circumstances surrounding the PMS have led to difficulty and hardship for a significant number of local people.
“We have mentioned in the past that remedies to the PMS situation are complex, but this is cold comfort to those dealing with the daily anxiety about their savings.
“We are determined to move forward quickly and with more clarity to avoid any further delays.
PA