FSA says closely monitoring bank B&B
The chairman of Financial Services Authority (FSA) said the regulator was closely monitoring Bradford & Bingley , the bank whose shares have slumped on concern about its business plan, Reuters reported.
Bradford & Bingley (B&B) on Friday increased its rights issue to 400 million pounds after U.S. investor TPG Capital pulled out of buying a stake.
"We have taken a close interest in it," FSA Chairman Callum McCarthy told Reuters on the sidelines of a business conference in this southern French city.
Asked whether the FSA would continue to monitor Bradford & Bingley closely, McCarthy replied: "Of course."
The FSA is keen to avoid problems from the global credit crunch spreading across Britain's financial sector after the near collapse of British bank Northern Rock last year, which ended up being nationalised by the government.
TPG pulled out of buying a stake in B&B after ratings agency Moody's cut B&B's debt ratings, triggering a clause allowing TPG to scrap the agreement.
That prompted the FSA to step in to help ensure that an alternative financing plan was in place.
B&B had planned to sell TPG a 23 percent stake for 179 million pounds and raise 258 million through a rights issue. It will now seek a net 400 million pounds through the rights issue.
B&B said that under the enlarged rights issue, it had proposed issuing around 828 million new shares -- some 57 percent of the enlarged share capital -- and would offer shareholders 67 new shares for every 50 existing ones.
Its shares closed down 18 percent at 50 pence, after hitting an all-time low of 48p -- below their rights issue price of 55p. The bank has not changed the subscription price for the enlarged offer.
McCarthy told Reuters that B&B had experienced some "vicissitudes" over its fundraising but added he was glad that an alternative solution had been found.
B&B is Britain's biggest buy-to-let lender and has seen losses on bad debts rise as house prices fall and the economy stutters.
The bank has a current stock market value of around 310 million pounds.