PMS administrator declines to comment on loans
THE administrator for the troubled Presbyterian Mutual Society has declined to comment on fears over its loan book.
The society has 170 million lent out to churches and individuals which generate 12 million per year of income.
Its report to the Presbyterian General Assembly in June said that congregations and individuals continued to use its very competitive borrowing facilities for purposes ranging "from car, house and land purchase to business expansion and bridging finance".
One investment expert told the News Letter that there were reports in banking circles that a major property developer with loans from the Presbyterian Mutual Society was in serious difficulty.
"The question is being asked as to how secure the loan book would be if any of these loans were given out to property developers at the height of the property market," he said.
"In a worst case scenario such people might have been able to exploit connections with the Presbyterian Church to merit loans and the value of any property bought would now have plummeted," he added.
Should they become unable to pay the loan rates in the current climate, the society could be left looking at repossessing land that is worth substantially less than the amount of money owed, he said, adding that the value of properties on which such loans may have been secured would also have dropped significantly in the current market.
It is also understood that professionals on the fringes of the society's current operations are also very eager to get an overview of the breakdown of loans owed to the society.
Problems began for the 300 million PMS last month when some of the 10,000 shareholders realised their money was not guaranteed by the Government.
Panicking, they withdrew 21 million, sapping all the society's cash and forcing it into administration.
The society said its underlying investments in commercial property and secured loans had "not disappeared".
An administrator is now assessing its books to see if it can be rescued.
Asked about the loan book yesterday, the administrator said that he was still in the process of going through the society's books and was therefore unable to give any meaningful comment.
It is understood that the society was more conservative in its loans than typical banks, with all loans being well secured by such standards.
Normally any bank would have a percentage of "bad debt" and it is understood that the PMS, while not a bank, might eventually be seen to have a proportion of loans in this category.
However the current process will eventually see any such issues, should they arise, laid out in full before the shareholders, who will then decide on the best course of action.
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Tuesday 14 February 2012
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