B&B bankers left with over 70 percent of rights issue
LONDON (Reuters) - Bankers for Bradford & Bingley BB.L have been left with over 70 percent of its 400 million pound rights issue, the UK lender said, as it hired the former head of rival Alliance & Leicester to draw a line under its troubles.
The mortgage bank, which has seen a torrid three months since it first surprised the market with news of an emergency rights issue, named City veteran Richard Pym as chief executive.
Pym replaces Steven Crawshaw, who quit in June for health reasons as B&B struggled to push through the funding boost.
The former chief executive of A&L ALLL.L has already taken the helm but is not expected to outline his strategy before October, though he told Reuters he would review a deal to buy loans from finance company GMAC that has driven arrears higher.
"I don't think there is a banking chief executive in the world who doesn't have some issues to address at the moment, and I haven't seen anything to date that ... we can't resolve," he said in a telephone interview.
"Obviously, there are some specialist loans which have got high arrears at the moment, but the core lending book, the prime buy-to-let book, is very solid."
The embattled bank, forced to turn to investors for cash in the face of a fast-deteriorating UK economy, said on Monday investors took up only 27.8 percent of its fundraising.
Underwriters Citi and UBS now have until Friday to place the remainder of the cut-price, twice-restructured offering.
The take-up for the rights issue -- the latest of several such cash injections by banks hit by the credit crunch -- is well below historical levels but was as analysts had expected and above the 8 percent seen at rival HBOS.
B&B traded close to the rights price of 55p in the run-up to the call, and just above as subscriptions closed on Friday.
HOPES OF STABILITY
Most of B&B's retail shareholders, who made up 40 percent of the investor base before the issue, are not expected to have participated, but four top shareholders -- Standard Life, Legal & General, M&G and Insight -- are understood to have taken up their roughly 13 percent share.
They had been expected to take up as much as 145 million pounds of shares to back the underwriters, in a deal also supported by six of Britain's largest lenders -- spreading the cost of propping up B&B over 12 major institutions.
"We're all very big players. It's not a big concern to us," one source familiar with the matter said on Monday. "We have five days to place the rump."
The six retail banks have agreed to take up to half the rights issue, or as much as 3 percent each of B&B. That number should come down, however, after take-up was stronger than expected at the time of the deal, and with shares currently trading close to 55p, well above recent lows. Continued...
