LONDONDERRY shareholders of the Presbyterian Mutual Society have received letters from the organisation stating that their accounts have been frozen.
A 'run' on the organisations cash has escalated to the point where the Society cannot permit anymore withdrawals by its share holders.
The society has assets of £300m and about 9,500 shareholder accounts.
And, the organisation has released a state
ment saying: "Because of the current financial circumstances it s unable to meet the demand from its shareholders for withdrawal of funds".
Formed in 1982, The Presbyterian Mutual Society, based at Glengall Street in Belfast, was formed to operate for the benefit of its members and the Presbyterian Church in Ireland as a whole. However, the organisation is a separate legal entity from the Church.
The main financial activity of the Society is 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 an income.
The statement released today from the Society said the credit crunch is having a severe effect on their "level of liquid assets". And, it reads: "Shareholders in a mutual society are not covered by any form of government guarantee scheme.
"The Society believes the availability of the governments financial compensation scheme to allow other forms of savings accounts and financial institutions has led to an increasing number of people to move their funds out of the society.
"It is now evident that we have reached a situation where there is insufficient cash held by the Society to meet the continuing level of demand. The society has decided that, in the interests of all its shareholders, it must now cease making repayments to members."
The statement goes onto say that the Society is aware that this will cause hardship for individuals and that it deeply regrets having to take this course of action. The Society said it would only be in a position to repay shareholders when its assets were sold or when loan debts were recovered.
And, the Society admitted that obtaining liquid assets from these sources could take some time in the current climate.
"It is also the case that the sale of its commercial property holdings in current market conditions is not desirable," the statement said.
The Society's statement concluded by stating that directors are taking legal and financial advice on resolving the situation and ensuring the funds it holds on behalf of shareholders are protected.
