B&B shareholders in talks over investment of £400m
Jun 24 2008 by Iain Laing, The Journal
INVESTMENT group Resolution said it was in talks with leading Bradford & Bingley shareholders over plans to pump £400m into the embattled lender.
The proposals would replace B&B’s current fundraising move and form part of a wider £2bn plan by Resolution to snap up smaller banks and lenders, with the ultimate aim of merging these groups with B&B.
Resolution said it had been invited by a raft of major B&B investors who are unhappy with the bank’s current plans to shore up its finances by selling a 23% stake in the company to private equity firm Texas Pacific Group (TPG) and asking investors for £258m in a scaled-down rights issue.
The rights issue and TPG investment have already caused controversy, with B&B reducing the amount it was asking shareholders for and slashing the discount price after a profits warning threw the scheme into doubt.
B&B institutional investors, including Standard Life, Legal & General, Prudential and Insight, are involved in the Resolution plans.
Resolution said its proposals could see it take a stake of more than 30% in B&B, although it stressed it was not seeking to take over the bank.
It added that the plans would be led and funded by B&B investors, with Resolution using its expertise in consolidation to enlarge and strengthen B&B.
Resolution said it will work with B&B, regulators, rating agencies, and the bank’s investors over the next two weeks with a view to tabling a formal proposal by July 4.
Resolution said it was hoping to create a new, larger bank, with a better business model, lower costs and better access to wholesale funding.
It said: “With Resolution as a major equity investor, a strengthened Bradford & Bingley will have the capacity to acquire banking books and businesses and will be a more attractive partner for mergers.
“This will create a compelling strategy as a consolidator in the UK banking market with synergy potential.”
B&B gave a brief response to the Resolution plans, saying only that “we note Resolution’s press release and will be responding in due course”.
Resolution boss Clive Cowdery, who made his name by consolidating closed funds in the life insurance sector, already owns a 2.9% stake in B&B.
