One rarely hears of them though they do still exist.

Permanent Interest Bearing Shares (PIBS) used to find their way into many savers cautious portfolios as a safe, high yielding investment. However since the demise of the building society sector, PIBS are securities issued by building societies, usually at a fixed rate of interest and quoted and traded on the stock market.

They are not sold back to the building society. Occasionally a PIBS may have a variable rate, changing in line with other rates of interest.

They are essentially a form of risk capital, ranking lower than subordinated debt, and have been issued by building societies which cannot raise risk capital by issuing shares on the stock exchange like a bank.

All PIBS are permanent and have no maturity date but may allow the society to call in or redeem on a set date. The capital value of PIBS reacts like gilts or fixed interest stock by falling when interest rates rise and rising when rates fall.

If a building society gets into trouble it can pass on paying the interest coupon, and in the event of total failure PIBS holders are last in the queue to get their money back.

Interest payments are usually paid gross and twice yearly, they can be sheltered from income tax by holding in a SIPP or ISA. Special tax rules mean that losses or capital gains are not chargeable to CGT.

Holders of PIBS are members of the issuing society with voting rights, and those issued by building societies that have demutualised become Permanent Subordinated Bonds (PSBs).

Investors have had some nasty wake up calls recently as the Bank of Ireland as part of its restricting plans to address its debt problems offered to pay just 20p in the pound to holders of the Bristol & West 13.375 per cent PIBS.

Angry investors threatened legal action when the Bank of Ireland offered to pay just a fifth of the value of the Bristol & West PIBS and the move was put on hold to review the situation.

News was no better for shareholders with the Principality Building Society who were told on July 8 the society would not exercise its ‘call option’ on its 5.375 per cent notes.