Pensioners strike blow over Bristol & West losses

More than 2,000 pensioners trying to stop their savings being raided by the Bank of Ireland have claimed their first success.

The Bank of Ireland agreed yesterday to delay the first deadline for responses to proposals that would see holders of bonds issued by the old Bristol & West lose at least 80 per cent of their face value. These permanent investment-bearing shares, or pibs, are typically used by people with small savings to top up their pension pots and pay out 13.375 per cent on face value every year.

The Bank of Ireland bought Bristol & West in 1997 and has included the pibs as part of a €2.6bn (£2.3bn) financial restructuring, even though they are valued at only £75m. The Irish government holds more than one-third of the Bank of Ireland's shares and has demanded the restructure to help to save the country's financial system.

Pibs holders were last week given until 22 June to vote in favour of the 20 per cent deal under an "early bird" offer. If they were to miss this deadline, the offer would be reduced.

Brown Rudnick, the pensioners' lawyer, wrote to Bank of Ireland chief executive Brian Kealy and Irish finance minister Michael Noonan – the Financial Services Authority's chief executive, Hector Sants, was cc-ed – demanding an extension to the deadline.

There were fears that many of the pibs holders might be infirm, elderly or not know where their original certificates were located up to 20 years after they had first bought them.

The pensioners now have until 5 July to vote, but this is unlikely to prevent future legal action. The pensioners' central contention is that if they vote "no" to the proposal and the "yes" camp is in the minority, they will have given up their rights to the 20 per cent offer and receive just a penny for every £1,000 that they own.

In an earlier letter to the Bank of Ireland and Irish government this week, Brown Rudnick partner Louise Verrill stated: "In the event that you do not agree to our clients' request [to remove the pibs from the restructuring], we will have no alternative but to issue legal proceedings this week in the High Court of England and Wales for a declaration that the Proposed Devaluation Resolutions constitute an abuse of power by the Bank of Ireland and an unlawful oppression by the majority bondholders on the minority."

Waseem Shakoor, a leading holder of pibs who is helping to lead the campaign, said: "This shows that the will of some very determined old folk is having a serious impact, even against the Irish state. Whilst the extension to the deadline for acceptance will be welcome to many pensioners, it merely puts back the day of reckoning."