Bradford & Bingley & HBOS to secure rights issues

Bradford & Bingley along with HBOS are to secure support from shareholders for their urgent rights issues this week; this move will hopefully recapitalize the damaged financial sector in Britain.

It is expected that B&B who are specialists for buy-to-let mortgages will win the approval from shareholders, for its £400m rights issue; this is now the banks third attempt to do so. The shareholders meeting will take place on Thursday in Sheffield.

On the Friday, HBOS £4bn rights issue will close, it is expected that four fifths of the shareholders will take up those rights. According to the Telegraph, there will be a shortfall of 20pc or £800m; this will be picked up by HBOS’s underwriters – Morgan Stanley and Dresdner Kleinwort.

On Friday, HBOS shares dropped 8½p below the rights price, to just 266½p. The news of HBOS’s flagging share price seemed to have strengthened the Treasury and Financial Services Authority decision to reform the rights issue, in the hope of easing the process of raising capital.

Senior bankers will be meeting the Treasury today, who will discuss possible changes. It is also thought that the FSA will consider a takeover of Bradford & Bingley, once the capital raising is complete; they also need to find themselves a new chief executive.