Bradford & Bingley mortgage lender saved by largest shareholder

After TPG Capital pulls out of a £400m capital increase for the Bradford & Bingley building society, the mortgage lender was rescued Thursday by it’s largest shareholder.

The private equity group, TPG Capital was going to get a 23 per cent stake in the bank but they had the legal right to pull out after Moody’s credit rating agency said they were going to cut Bradford & Bingley’s credit rating.

The shareholder group includes HBOS, Standard Life, M&G and Legal & General; all were backing Clive Cowdery’s attempt to beat the TPG Capital deal.

The investment banks UBS and Citigroup have underwritten the revised deal, this will see Bradford & Bingley raise £400m at 55p a share through an expanded rights issue, this deal will take several weeks to be voted on by shareholders.

After TPG made the decision to pull out, it now looks like their reputation will be damaged and relationships with regulators and investors will become harder, this could make investments in UK financial services hard for the group in the future.

Source: Read