My husband was given free shares from Irish Permanent Building Society when it demutualised some years ago. He has his share certificates as proof of this and was, for years, receiving invitations to AGMs and getting a small dividend, until the crash.
He worked abroad and failed to change his address on his return. He has tried on several occasions to re-establish ownership of said shares, writing to the Dublin office, from which I get my correspondence. (I too got free shares, no dividend, for many years). He has never had a reply.
The staff in branch offices of PTSB are unable to help him.
How can he recover ownership? Now that PTSB is for sale, it seems a good time to discover what has happened to his shares.
READ MORE
Ms H.G.
An awful lot has happened at Permanent TSB since your husband (and you) got those free shares back in 1994, more than 30 years ago. But your letter surprises me on two fronts.
First, it appears you are getting correspondence from the bank and you say you had free shares with them. On that basis, I am assuming the bank should have made very clear to you over the past year what has happened your shares – and, by extension, his.
Second, given that the bank conducted a major “odd lot” offer – something I will explain in a moment – just over a year ago, it seems incomprehensible that no one at the bank can let him know what has happened to his shares or direct him to someone who can advise him in detail very quickly.
You note that your husband worked abroad for a number of years. I am not sure when that was, or, more importantly, when he returned. But certainly if he was in this country in the latter half of last year, he really should have been aware of what was happening at the bank if he was tuned in to the news at all, even on the most casual basis.
Let’s step back in time for a minute.
Back in 1994, your husband, along with other qualifying members of Irish Permanent Building Society, received shares as it demutualised and became a publicly listed company.
Of the Permo’s 500,000-odd customers, 227,000 qualified for shares. If they had a mortgage with a balance of at least £500 – yes it was back in pre-euro days – as of March 23rd, 1994 when the demutualisation vote was held, they qualified for 300 shares in the subsequently listed banking business.
If they had had an investment account with the Permo since at least February 23rd, 1992 – two years before demutualisation – which had a minimum balance of £100 since July 1st, 1993, they also qualified for those 300 shares.
The two-year requirement was an attempt to weed out carpetbaggers who had signed up with the building society as rumours of its planned demutualisation grew. It was a time when a lot of building societies were considering the same action and intrepid investors were looking for loopholes to secure a windfall.
If you had both an investment account and a mortgage that met the criteria, you got 600 shares.
A further 100,000 people qualified for a cash payment but not shares and 170,000 got nothing by virtue of the type of accounts they held with the lender.
Anyone holding their shares for two years got a bonus 15 shares per 300-share holding on the first and second anniversaries of demutualisation. So, if you started with 300 shares, you had 330 two years later, or 660 if you had 600 to start with.
Five years on, in 1999, Irish Permanent merged with Irish Life to create Irish Life & Permanent. At that time, you got one share in the new Irish Life & Permanent for every old Irish Permanent share you held. And in 2001, TSB was acquired.
The good times didn’t last. In 2009, along with the rest of the Irish financial services sector, the group was hit by rising bad debts on risky loans following the financial crash. Two years later, the State had to step in with a bailout that saw it become holder of 99.2 per cent of the group’ equity.
Irish Life was hived off the following year, 2012, and, in February of 2013, was sold to Great-West Lifeco, which already owned Canada Life in Ireland, for €1.3 billion.
The State bailout dramatically changed the picture for you and your husband.
Back in 2007, Irish Life & Permanent was valued at €6.2 billion with 275 million shares in issue and a share price of €22.80. By 2013, with the shares issued to give the State its 99.2 per cent stake, there were 36.5 billion shares in issue in what was now called Permanent TSB which had a market cap of just €1.28 billion.
Essentially, your shares were worth just 0.8 per cent of what they had been originally in terms of the your stake in the bank.
In 2015, Permanent TSB consolidated its shares in an exercise which meant that investors now hold one share for every 100 they held. Ironically, according to the bank itself, that was the first year the business recorded a profit since 2007.
As of last week, the market cap of the group is €1.58 billion, not a huge improvement on 2013.
Odd lot offer
But something very important happened last year. In common with AIB, Permanent TSB made what is called an “odd lot offer” for shares. Essentially, it offered to buy back shares from shareholders holding fewer than 100 shares in certificate form at a small premium to the price they were trading in the market.
[ PTSB joins AIB in plan to take out small legacy investorsOpens in new window ]
You and your husband would have been affected. Of the lender’s roughly 129,000 shareholders, more than 128,000 held fewer than 100 shares. The average holding of the group was much lower, just under five shares post the 2015 recapitalisation.
As the shares were trading at around €1.66 in September and October of last year when this was happening, selling those shares on the market would have cost investors multiples of what they were actually worth. So they were locked in.
And, from the bank’s perspective, they were cluttering up the share register as it tried to reinvent itself as a modern third force in Irish banking.
The key thing here for your husband is that while shareholders could expressly refuse to take part in the odd lot offer, the default position was that the shares would be acquired by Permanent TSB.
So people like your husband who knew nothing of what was going on, because he presumably was not keeping up with news affecting his investment and his address was out of date so they could not contact him, had their shares bought from them.
The bank paid €1.74 per share – a 5 per cent premium to the price around that time – and sent cheques out to all shareholders affected – at the address the share registrar had on file. Those cheques went out in the last week of October last year.
So, to answer your main query, he cannot recover ownership of the shares. At this point, he has no shares. The fact that he holds now-invalid share certificates does not matter – although they should have a unique shareholder reference number which will identify his old holding in the bank. And whether PTSB, as it is now called, is sold or not is now of no consequence to him.
But he does have a payment of up to €12.18 hanging around somewhere, assuming he had seven shares after the recapitalisation.
And that’s where the staff at the bank really should have been more forthcoming.
At the time of the odd lot offer, PTSB’s share registrar – the people who manage its register of shareholders – was a group called Link which had a number for enquiries from PTSB shareholders. However, to further complicate matters, around the same time as the odd lot offer, Link was being acquired by Mitsubishi UFJ Financial Group (MUFG).
PTSB’s site says that anyone who simply did not engage in the process but wants to know where the shares or cash is now should contact MUFG on 01 5530050 or email at enquiriesIreland@cm.mpms.mufg.com, putting “PTSB Odd-lot Offer” in the subject line.
He should contact them with his updated address details. They will, no doubt, tell him what other proof of ownership they require – such as that shareholder reference number.
Of course, now that the shares have been sold – albeit without his knowledge – the issue of tax arises.
As he received these shares free, any return from their sale counts as pure profit. Indexation is irrelevant because they cost him nothing.
However, as his return will be less than €12.20 and he is entitled to €1,270 in capital gains for last year when they were sold, he will not have to worry about tax. However, neither will he have capital losses accruing on a shareholding that would once have been worth more than €15,000 to set against other capital gains.
It’s all a rather sad end to a 30-year plus adventure.
Of course, had he kept his details up to date with the share registrar, he wouldn’t be in the dark at this point but then I’m sure he knows that.
I suppose the most optimistic way to look at it is that shares he clearly has not engaged too much with for many years will actually deliver him a return – if only because they were free in the first place. Mind you, he’d be lucky to be able to afford a couple of festive drinks on the back of that extremely modest good fortune.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice.
