"Financially vulnerable" pensioners have called on the Financial Services Authority to investigate the Bank of Ireland (BoI) over what they argue are attempts to plunder their savings.
The BoI has asked holders of Bristol & West permanent interest-bearing shares (pibs) to hand them over for 20 per cent of their face value, or risk losing virtually everything, as part of a wider, €2.6bn (£2.3bn) financial restructuring. Bristol & West was bought by BoI in 1997.
The legal team for the pibs-holders, who typically use the bonds to top up their pensions because of the generous 13.375 per cent annual interest payments, have written to the FSA's chief executive, Hector Sants, requesting a "review of the conduct of BoI related to the exchange offer", and asking it to make "an immediate public announcement that it is doing so".
The shareholders' register, obtained by the Liberal Democrat MP John Hemming, shows that 1,463 of the 2,635 people who have pibs own 5,000 of the bonds or fewer. Mr Hemming said: "It makes clear that there are a large number of people affected and that this isn't a mainly institutional issue."
The legal team, led by Brown Rudnick, is expected to start legal proceedings in the High Court shortly. The team claims the BoI's proposals are "coercive". If a majority of pibs-holders accept the 20 per cent deal, those who opposed it could receive just 1p for every £1,000 of bonds they hold.
In the letter to Mr Sants, the lawyers argued: "As a matter of English law, where bondholders have power by a majority to vary the terms of the bond... such power must be exercised for the purpose of benefiting the class of bondholders as a whole. Such power cannot be used by the majority for their own benefit so as to oppress the minority."
The BoI has constantly denied that it is doing anything wrong.Reuse content