B&B rescued by £150m Texas Pacific deal

by Gill Montia

Story link: B&B rescued by £150m Texas Pacific deal

Bradford & Bingley (B&B) has announced that private equity firm, Texas Pacific Group (TPG), is injecting £150 million into the struggling buy-to-let lender.

The bank is also expected to issue a profit warning today and confirm that it will be appointing a new chief executive. Incumbent, Steven Crawshaw, is understood to be retiring because of ill health.

The investment from TPG comes as B&B looked to be struggling with its £300 million rights issue.

On Friday of last week, the lender’s shares closed only 6.25p above the discounted offer price.

This prompted fears that should it fall again, UBS and Citigroup, which have underwritten the rights issue, would be left with large quantities of unsold stock.

Following the intervention the fund raising will be redrawn, with existing shareholders providing around £250 million in addition to TPG’s investment.

The outcome for B&B will put pressure on other UK banks in the process of shoring up their balance sheets via rights issues.

Royal Bank of Scotland needs to raise £12 billion and HBOS £4 billion.

B&B’s news will also send a chill wind round the buy-to-let sector, as the bank’s annual profit could be £100 million below market expectations.