B&B roasted as rights issues wobble

Bradford & Bingley shareholders have backed its rights issue plan - but had some harsh words for management...

Last Updated: 31 Aug 2010

At an emergency meeting in Sheffield today, shareholders backed Bradford & Bingley’s plan to bolster its balance sheet with a £400m rights issue – despite the fact that shares in the bank are still trading below the proposed offer price. After two previous attempts to raise extra funds fell through, B&B hopes this will be third time lucky – although the two previous failures seem to have hammered the management team’s credibility, judging by some of the reported comments from shareholders today...

Guy Jubb of Standard Life (one of the four big shareholders who have teamed up to back B&B’s new rights issue) took the unusual step of turning up in person to the public meeting, to chastise the board about their earlier plan to give up shareholder pre-emption rights (the right to buy shares on the same terms) when they were trying to flog a chunk of the company to US private equity house TPG. And several smaller shareholders also expressed their dissatisfaction with chairman Sir Rod Kent’s handling of the whole affair – for which he was suitably apologetic. Were it not for the fact that only about ten shareholders and their dogs showed up to the meeting (which was inexplicably held in the 12,000-capacity Sheffield Arena), he might have got even more of an ear-bashing. At this rate he might be running an actual B&B before the year is out.

And B&B’s not the only bank sweating today. It’s also a big day for fundraising at HBOS and Barclays, both of whom are coming towards the end of their respective rights issues. Barclays, whose issue closes today, has been boosted by the Qatar Investment Authority’s decision to pile in with an extra £1.5bn, increasing its stake to nearly 8% (the Qatari PM’s personal vehicle is also buying a further 2%) – clearly they've decided to double up in the hope that this investment will eventually make them some money…

As for HBOS, the outcome of its rights issue - which closes tomorrow – is still under a cloud. Like B&B, it’s currently trading below the offer price, despite a brief rally this morning. So if fund managers decide not to exercise their right to buy, it would force the underwriters (Morgan Stanley and Dresdner Kleinwort) to cough up for a substantial portion of the new shares – which would cost them hundreds of millions of pounds. Not really what they need at the moment…

Either way, it’s going to be an expensive week in the City. We suspect the fine wine and dining establishments in the Square Mile may be a little quieter than usual tomorrow night...

In today's bulletin:
It wasn't an Equitable Life, Gordon
B&B roasted as rights issues wobble
Cursor of death for the humble mouse? 
Leadership Week: Professor Rob Goffee from LBS
Do-gooders do better

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