Banking News Bradford & Bingley Awaits Its Fate 1877

Bradford & Bingley awaits its fate

09 July 2008 / by Rebecca Sargent
All Bradford & Bingley can do now is wait pensively for the outcome of its rights issue which is due to be open until mid-August. Shares in the bank closed down last night at a new low of 34p, 21p lower than the rights issue share price.

Speculation is rife in the City that shareholders will refuse their right to the cut price shares, forcing underwriters Citi and UBS, along with their sub-underwriters, including leading high street banks, to take a cash hit.

However, despite the potential loss, it has been reported that the investors involved would rather that than the potential hit the UK financial services sector could take if another bank went into insolvency.

As yet Bradford & Bingley has managed to keep its head above water and has so far escaped the drama of Northern Rock that saw customers with savings accounts queue around the clock as they battled to withdraw their money.

But, experts say, something has got to happen. According to reports, insiders believe that personnel is the key and the banks and institutions that are backing the rights issue are apparently on the hunt for a new chief executive to act as a knight in shining armour.

The Financial Services Authority (FSA) is also approaching this potential banking disaster head on as it is determined to avoid a repeat of the Northern Rock fiasco. According to reports, the FSA is currently on the hunt for a potential buyer, concentrating on the six main lenders that have stepped in to bail the buy-to-let mortgage specialist out, including RBS and Lloyds TSB.

In the meantime, Bradford & Bingley’s fate is left hanging in the balance, but the situation, according to experts, does not look set to follow in the footsteps of Northern Rock. This time around the banks customers are aware of the protection that covers a customers’ first £35,000 in the event of insolvency and this could be what has, so far, saved the bank from the embarrassment experienced by Northern Rock.

© Fair Investment Company Ltd

Written by Editorial Team