NealMorris wrote:Thankyou for your information, I have now read all your posts a couple of times and can see the situation is not quite as bad as I imagined. The problem for me it seems, they have transformed what was once a simple investment into something that is difficult to understand (hardly ethical). On that basis alone, you would imagine they would to see fit to offer to buy them back at their original £1 valuation. Quite apart from that, you would think there would be easier and cheaper ways for them to handle their liabilities.
I have sympathy regarding the complexity, but can one really blame the Society given the situation the banking system faced in June 2009 when the terms of the PIBS were "transformed" as you call it? I expect their negotiations with the subordinated debt holders and the regulator were fraught and their hand was very likely forced.
Furthermore, provided profitability continues, the terms are now (as of the recent RNS) in a practical sense identical to when the PIBS were issued in 2005: these PIBS always had a step-up call option every 5 years from 2021. If any investor didn't know that they really should have read the issue documentation. And the Society can hardly be blamed for volatility in the 5-year gilt yield!
Should they make a tender offer? They already have! (£1 is in jest, right?) The only people who are holding now are those who rejected the tender or purchased their PIBS after the tender, in which case they should be fully aware of all the conditions applying when they purchased, which have not been altered in any way since the tender.
So I have to say, I'm still a bit bemused at the flak being aimed at WBS. As for the PIBS, I think they potentially could give great returns still: long-term, given their 2.8% premium to 5-year gilts they should trade up and down either side of par. But this is just my opinion. Clearly the market thinks different at this moment.
GS