Bradford and Bingley is set to bolster its balance sheet by launching a £300m rights issue. Financial Times, The Times
The bank, which has been hit by the turmoil in the capital markets and concerns about declining UK house prices, was last night finalising details of the cash call, which is expected to be announced today.
B&B is expected to offer shareholders the opportunity to buy one new share for every share they own, at a deep discount to yesterday’s closing price of 158.75p.
B&B’s plans for a rights issue come as most of Britain’s banks are under pressure to strengthen their balance sheets, which have been exposed as fragile after the lenders suffered losses on securities backed by US mortgages. Royal Bank of Scotland is pressing ahead with a £12bn rights issue while HBOS has announced plans to raise £4bn.
The proceeds of B&B’s rights issue will boost its capital base, easing concerns about the effect of losses on the bank’s portfolio of Treasury assets.