Former farmer risks bankruptcy by taking BoI to court
Pensioner Albert Kempster is risking bankruptcy by taking on the Bank of Ireland in the High Court in London this week.
Mr Kempster, 73, owns permanent interest bearing shares (Pibs) that BoI wants to force him to sell at just 20pc of their cover value as part of a restructuring of the financial institution's balance sheet by the Government.
The former farmer, who also used to run a courier company, will claim in the London High Court on Wednesday that the terms offered by BoI are "unfair" to retail investors.
Mr Kempster is not the only investor likely to take a hit. Some £75m (€84,000) of the bonds are outstanding – meaning Pibs investors are facing a total loss of up to £60m (€67m).
About 2,400 retail investors, many of whom are pensioners, will be among those obliged to accept an 80pc haircut, like Mr Kempster, because they each hold on average less than £1,000 (€1,125) of Pibs.
Under the terms of the restructuring, Pibs investors are being offered either 20pc of face value in cash or 40pc in new BoI securities. However, a spokesman for Mr Kempster said the pensioner needs a nominal minimal holding of £120,000 (€135,000) to qualify for the 40pc swap. Mr Kempster, who lives in Glasgow, only bought £24,000 (€27,000) worth in 2009.
The Pibs, which pay 13.75pc interest, were originally issued by Bristol & West Building Society in 1991. The society was taken over by BoI in 1997.
According to a spokesman for Mr Kempster, Allen & Overy – BoI's legal advisers – will seek legal costs if he loses his case.
The costs would almost certainly bankrupt him, the spokesman said.