Bradford & Bingley shares slip 30%, profits down £52m
Bradford & Bingley is to raise £179 million by selling off a 23% stake in its business.
Shares in Bradford & Bingley have tumbled 30% following the beleaguered bank’s profit warning issued today (2 June).
The company’s underlying profits for the first four months of the year were £56 million, compared with £108 million in 2007.
B&B has blamed “difficult economic conditions” for the decline and said it remains cautious about the rest of the year.
In a bid to boost its finances, the bank is to sell a 23% stake of its business to US private equity giant, Texas Pacific Group (TPG) for £179m.
It also plans to ask its existing stakeholders to provide £258m of new capital, through a rights issue. Shares will be offered at 55p per share.
To add to B&B’s woes, its Chief Executive Steven Crawshaw resigned this week due to a “serious illness”. Chairman Rod Kent has now been appointed Executive Chairman.
Despite the stream of negative news, Kent is optimistic about the future. He said: “The last few weeks have been challenging for Bradford & Bingley, and this is a
disappointing trading update reflecting a more difficult market environment. I understand shareholders’ disappointment.
“Nevertheless, I am delighted to welcome TPG as a major strategic investor in Bradford & Bingley. With a strengthened capital base and the skills that TPG will bring I am sure we can develop the business to exploit the opportunities available in our markets in the medium term.”
By Natasha Piscitelli
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With the announcement that the government is to raise the £35,000 guarantee to £50,000 for those with savings in any of the banking groups, it will mean that those on immediate access are able to spread their savings so as to have no more than the guaranteed amount in any one group. However, there are those who have taken out fixed rate cash saving bonds for one year or more within one group, and as it stands have no guarantee above the governments £50,000.
This situation cannot be justified as it is totally discriminatory and bears no relationship to people’s actual total savings. We further have a situation where the Government have guaranteed 100% of all savings in Northern Rock. They have also nationalised Bradford & Bingley and facilitated the safe transfer of savings to the Banco Santander Group. Having set the precedence in the case of Northern Rock, how can the Government now declare that at this present time they are prepared to see the savings of many others possibly decimated. Is this what Gordon Brown would call a fair and just government?
If his idea, as he stated, is to act on each individual case, then why the announced increased, but limited, guarantee of savings in any one group. I trust he is forced to guarantee all individually held bank savings, not to unfairly cherry pick.
October 4th, 2008 at 6:41 pm