Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Brown Shipley offers redress for Anglo Irish bond default

Brown Shipley offers redress for Anglo Irish bond default

Brown Shipley is compensating clients who saw their investments in Anglo Irish and Lambay bonds wiped out after the bank was nationalised in 2009.

The private bank has offered compensation to clients with holdings in an Anglo Irish bond with a maturity of 2049 and a perpetual floating share issued by its subsidiary Lambay Capital.

Both holdings are now worthless and the capital invested is not retrievable. Brown Shipley also held both bonds in its Sterling Bond fund, run by Kevin Doran (pictured).

In the fund’s institutional investors’ report from November of last year, the group noted it had over £5.8 million invested in the Anglo Irish Bond with its price and coupon both valued at zero. The report makes no mention of the Lambay bond. The private bank declined to disclose the number of clients affected or the amount invested across private client portfolios.

Investment managers at Brown Shipley bought the Lambay bond for a number of private clients in the summer of 2007 and the Anglo Irish bond in the spring of 2008.

The private bank is understood to be in negotiations with clients over the offers, while a number have referred their complaints to the Financial Ombudsman Service (FOS), taking the view that the investment in bank debt after the onset of the financial crisis exposed their capital to risks they were not prepared to take.

Wealth Manager understands that in some cases Brown Shipley has said the bond investments were suitable but the proportion of capital invested may not have been, so it is prepared to pay compensation on the proportion of the investment that it deems was appropriate.

However, in correspondence from the FOS seen by Wealth Manager, it said that if a client’s risk profile was low, further investments in these bonds in 2008 after the collapse of Northern Rock were not suitable.

It concluded that Brown Shipley should put the client in the same position they would have been in if they had not been advised to invest in the bonds after 2008.

A spokesperson from Brown Shipley said: ‘Brown Shipley seeks to take care of every aspect of clients’ investments with the creation of an agreed, bespoke investment strategy based on a thorough understanding of their objectives, risk profile and financial circumstances.’

An FOS spokesperson said it was unable to comment on cases until a final decision has been made.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Sector spotlight: how Harwood's Philbin is playing emerging markets

Sector spotlight: how Harwood's Philbin is playing emerging markets

Emerging markets have been a rollercoaster for investors, but amid the doom there have been have been bright spots, such as India. 

Play JP Morgan AM's Conte: why France is my biggest overweight

JP Morgan AM's Conte: why France is my biggest overweight

The European Smaller Companies trust fund manager is also finding opportunities within the European IPO market.

Brewin's Foster: running out of value with Sandy Nairn

Brewin's Foster: running out of value with Sandy Nairn

In this week's podcast, Guy Foster and Dr Sandy Nairn discuss caution towards the stretched valuations most stock markets today currently offer.

Your Business: Cover Star Club

Profile: CHI's bond supremo on liquidity and bond risk management

Profile: CHI's bond supremo on liquidity and bond risk management

'Some people have been extremely complacent about rate rise risk. Myself, I wish they would just get on with it.'

Wealth Manager on Twitter