Manchester Building Society will not pay its Octobercoupon on the two tranches of permanent interest-bearing shares in issue underits plan to conserve capital after registering a common equity Tier 1regulatory capital shortfall against its combined buffer requirement.
Coupons on permanentinterest-bearing shares are not cumulative, meaning any unpaid interestpayments are permanently canceled.
The building society reported aloss of £1.4 million in the first half, compared to a profit of nearly £2.1million in the year-ago period. It booked impairment losses of £1.4 million, ofwhich half relates to its Spanish lifetime mortgage portfolio. Reserves fell by£1.7 million.
The company is required to submita capital conservation plan to the U.K. Prudential Regulation Authority,setting out proposed measures to improve its regulatory capital position. Itnoted that the outcome and timing of the PRA regulatory process is uncertain.
Manchester Building Society addedthat it does not expect to pay April 2017 coupons on permanent interest-bearingshares either and noted the uncertainty over its ability to make further couponpayments after that, given the risks facing the business.