MEMBERS OF the Presbyterian Church in the North have become the latest victims of the global credit crunch after the Presbyterian Mutual Society froze their accounts.

The Belfast-based organisation, set up 26 years ago to encourage Presbyterians to save through their own church, has been forced to tell nearly 10,000 members they are not able to access their cash. The society has assets of nearly £300 million but a huge demand from its members to withdraw money in recent weeks has exhausted its immediate funds.

The society, a separate legal entity from the church, is managed by a board of ministers and laymen. To join the society, members purchase shares in multiples of £100 up to a maximum of £20,000. The society’s principal business activity consists of receiving money from shareholders, on which it pays a dividend, and making loans to churches and private individuals.

It also invests in commercial property in England and Scotland from which it receives a rental income.

The directors of the society believe the fact that shareholders’ funds in a mutual society are not covered by any form of Government guarantee has prompted an “increasing number of people” to move their savings.

In a statement yesterday, the directors confirmed that “because of the current exceptional financial circumstances, it is unable to meet the demand from its shareholders for withdrawal of funds”.

They blamed the credit crunch for having a “severe effect on the society’s level of liquid assets”.

The society recently wrote to its shareholders to explain that if significant levels of withdrawals were made, it would be unlikely to be able to meet the obligation under its rules to provide repayment to shareholders on 21 days’ notice.

“It is now evident that we have reached a situation where there is insufficient cash held by the society to meet the continuing level of demand. The society has decided that, in the interests of all its shareholders, it must now cease making repayments to members,” its directors added.

The society said it deeply regretted it had been forced to take the action because it was aware it could cause hardship for its members.

The Presbyterian Church in Ireland said it is deeply concerned by the developments.

The Rev Dr Donald Watts, clerk of the general assembly, said the church could not underwrite the commitments of the society. But he added: “The reality is that many Presbyterians who have invested in the society are now understandably worried and we have a responsibility to care pastorally for them.”