Bradford And Bingley Are Next To Go Under

Discussion in 'Wall St. News' started by THE-BEAKER, Jun 3, 2008.

  1. this organisation is finished.

    everyone here in the uk knows it but nobody dare say it.

    i think it is worse than northern rock.

    these guys own 12% of the uk buy to let market and issued 1 in 4 mortgages to finance it.

    expect queues from customers any day now.

    once those pictures go out on sky news our beloved chancellor darling will be shitting himself.

    Underwriters to Bradford & Bingley's emergency rights issue were on the point of pulling the plug on the deal before private equity giant Texas Pacific Group bailed out the buy-to-let lender.

    The cost of the B&B's emergency rights issue has soared from £24m to £37m

    UBS and Citigroup believed B&B's massive profits warning, which caused the shares to tank 24pc to 67p yesterday, was sufficient to allow them to withdraw from underwriting the bank's initial £300m rights issue - an unprecedented move that would have left the troubled mortgage specialist in search of new capital sending shockwaves through Britain's fragile banking sector.

    The two investment banks believed that material information on the group was omitted when they signed up to underwrite the rights issue two weeks ago.

    One source said: "When the full picture emerged, they went to B&B and said this is not how you described it to us. The choices were either to call in the lawyers or rearrange the issue."

    Fears that they would abandon the lender were serious enough for the Financial Services Authority to intervene.

    Analysis: Bang to rights
    More on bankingadvertisementThe regulator contacted UBS and Citi over the weekend to discuss their intentions, although an insider insisted the intervention was "shepherding and encouraging" rather than "strong-arming".

    Shareholders were livid that UBS and Citi were able to escape their underwriting commitments, for which they were paid £9m. One said: "In my memory this is without precedent, the underwriters getting off the hook. Shareholders will want an explanation." Since BP's troubled float in 1987, no underwriter in a major issue has been left to pick up the stock.

    B&B's shock profits warning pushed the bank into an £8m pre-tax loss for the first four months of the year compared with £108m of profit for the same period last year.

    The loss was caused by a sharp increase in the bank's bad debt charge and a deteriorating profit margin due to soaring funding costs. Bad debts jumped from £23m to £108m on an annualised basis after a £36m charge for the four months to April. The margin tumbled from 1.16pc to 0.98pc, with B&B predicting margins "for 2008 to be between 0.9pc and 0.95pc".

    B&B's trading problems were compounded by another £89m of writedowns on its credit market assets, taking the total sub-prime related hit so far to well in excess of £300m.

    Analysts and investors welcomed the arrival of TPG on the share register as a vote of confidence in the bank. TPG is buying the stake for £179m at 55p a share, well below the initial planned rights issue price of 82p. The rights issue has also been completely overhauled. Instead of the £300m planned at 82p, with 16 shares for every 25 owned, B&B will now raise £258m at 55p a share with investors offered 19 new shares for every 25 they hold.

    The cost of the issue has soared from £24m to £37m, partly due to reprinting the prospectus for the bank's 900,000 small shareholders - estimated to cost up to £10m. Citi and UBS will also see their £9m underwriting fees rise slightly.
  2. Daal


    they can just call HM Treasury. they are the equity buyers of last resort, no share offering fails with Alistair making markets
  3. Thus the UK is finally getting to enjoy the import of American Financial Engineering ?

    Enjoy. If the UK continues to import American political intelligence, it too will export its wealth at the speed of light.

    Like father, like son.

    In this case, like son, like father.

    It has already/and is currently happening.

    Why would anybody place their money with a manager who is losing his own personal money at the speed of light?

    Hello, anybody home?
  4. m22au


    Now trading below 49p, more than 10% below the rights price of 55p
  5. its still quiet remarkable how a building society based in bradford that services the local population of 50 thousand plus a few farmers and shepherds working on the old banking practise of
    3-6-3. ( pay savers 3%, charge borrowers 6% and fuck off down the golf course at 3pm) emerged as a major player in the uk mortgage market.

    they are bankrupt on paper.

    they are trying to service a leveraged defaulting mortgage debt at low rates by accessing the wholesale markets at high rates.

    they are seriously finished.

    im only surprised its taken this long for the market to wake up to this fact.

    they are a sell at 40 pence and above.