Department looks at church 'help'

The society has said it is stopping repayments to members

Enterprise Minister Arlene Foster has said her department will do all it can to help the Presbyterian Mutual Society through its cash problems.

The Belfast-based PMS has said it is stopping repayments to members because it cannot meet demand for withdrawals.

The society has assets of £300m and about 9,500 shareholder accounts.

Mrs Foster said her department was "looking at the options available to the society" and would do all it could to help.

The PMS, set up in 1982, is a separate legal entity from the Presbyterian Church in Ireland.

The society's Colin Ferguson said "nervous investors" were moving their money because the PMS was not covered by the government's guarantee scheme.

"The funds have not disappeared," he said.

"It is simply a matter of the society having insufficient cash to meet the demands for withdrawals - the funds are now sitting in the commercial property that we own and in loans that we have made."

Enterprise Minister Arlene Foster said her department would try to help

The society's activities consist of receiving money from shareholders - on which it pays a dividend - making loans to churches and private individuals, and making investments in commercial property in England and Scotland from which it derives a rental income.

The society is not covered by the Financial Services Compensation Scheme, but has made approaches to Government seeking to have it extended to its shareholders.

"Recently the credit crunch has begun to have a severe effect on the society's level of liquid assets," the society said.

"Shareholders' funds in a mutual society are not covered by any form of government guarantee scheme.

"The society believes that the availability of the government's financial compensation scheme to other forms of savings accounts and financial institutions has led an increasing number of people to move their funds out of the society."

The Presbyterian Church in Ireland has expressed "deep concern" at the move and offered "pastoral care" to shareholders.

The Clerk of the General Assembly - which oversees the running of the church - Reverend Donald Watts said that it was clear the church "cannot in any way underwrite the commitments of the society".

"However, the reality is that many Presbyterians who have invested in the society are now understandably worried and we have a responsibility to care pastorally for them," he said.

The Moderator of the church, Reverend Donald Patton, has written to Prime Minister Gordon Brown encouraging "a positive response" to the financial guarantee request.