Shares in the troubled Bradford & Bingley (BB) has accelerated their losses, hitting a fresh low amid concerns over the mortgage bank’s outlook, even after an enlarged £400 million cash call.
The stock closed a further 19 per cent, or 8p, adrift at 34p after touching an all-time low of 31p – well below its rights issue price of 55p.
B&B was forced to increase its rights issue last week, after a credit rating downgrade from Moody’s prompted US private equity investor TPG to pull out of buying a stake. TPG had been brought in weeks earlier, when the bank slashed its issue price as trading conditions deteriorated.
B&B has said the latest issue, which will cost it more than £55 million in underwriting, legal and other expenses, is supported by top investors and fully underwritten – but still shares tumbled.
“This third attempt looks like a dog’s breakfast” said David Buik at Cantor Index.
“Though depositors’ funds are safe, and in no way can this bank’s problems be seen as a replication of Northern Rock, we can only hope the management of this beleaguered lender and its advisors have plan B in place. Hopefully it will take the shape of a white knight in shining armour who will sweep up this damsel in distress, removing any possibility of further embarrassment to the sector.’’
Analysts say finding a buyer could be tough. Entrepreneur Clive Cowdery, who tried to gatecrash the TPG deal with his own plan to inject £400 million through vehicle Resolution, has indicated he is not preparing to return after walking away late last month.
UK banks will be watching with interest, less than a year after Northern Rock. Reports yesterday said major UK commercial lenders had struck sub-underwriting agreements with B&B’s underwriters. This move could leave HSBC (HSBA), Lloyds TSB (Lloy), HBOS (HBOS), Barclays (BARC), Santander’s Abbey and Royal Bank of Scotland (RBOS) with a combined 33 per cent stake in B&B.