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June 2, 2008

B&B shares plummet as profit vanishes and arrears rise

by Gill Montia

Story link: B&B shares plummet as profit vanishes and arrears rise

Bradford & Bingley’s (B&B) shares fell to an all time low of 65.5p this morning.

The lender recorded an £8 million pre-tax loss in the first four months of the year, compared to pre-tax profit of £107 million in the same period of 2007.

The bank also reported that the number of borrowers who are more than three months in arrears with their mortgage payments has risen from 1.63% to 2.16% during the past four months. The trend is expected to continue.

Over the weekend, B&B secured a £150 million injection of cash from private equity firm, Texas Pacific Group (TPG), allowing the bank to re-orchestrate its £300 million rights issue and raise only around £250 million from shareholders.

However, the dramatic slide in B&B’s share price (which at one point led to trading being suspended) was followed by the news that TPG will add £179 million to its cash injection.

The move will make TPG the bank’s largest shareholder and give it the right to appoint non-executive directors.

B&B has also confirmed that its chief executive, Steven Crawshaw, has resigned on health grounds and that the post will be filled temporarily by the bank’s chairman, Rod Kent.

Mr Crawshaw has been criticised for having refuted suggestions that the bank would need to raise more cash, only weeks before the rights issue was announced.

 

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