Permanent interest bearing shares

In finance, permanent interest bearing shares, or PIBS, are fixed-interest securities issued by building societies. PIBS become perpetual subordinated bonds if their issuer demutualises. Building societies use them in the way public limited companies use preference shares. Although similar to bonds, PIBS typically exist as long as their issuer does. Many PIBS were originally issued in an era of higher interest rates, and so appear attractive to investors looking for income in a world of lower interest rates. However, there are some disadvantages to PIBS; unlike bonds they have no fixed redemption date, so the buyer is at the mercy of the markets when they want to sell. Also, PIBS are not covered by UK government compensation schemes, interest does not 'roll up' - if a payment is missed, it is gone for good - and they rank behind depositors and other members in the event of financial distress.