B&B shareholders launch legal action over rights issue
by Gill Montia
Bradford & Bingley (B&B) shareholders have instructed solicitors to seek redress against the Government over the nationalisation of the buy-to-let lender, in September of last year.
At the time of its collapse, parts of the bank were sold to Santander but its £41 billion mortgage book came into public ownership.
In May B&B had launched a £400 million rights issue, only weeks after denying that it needed to raise funds.
In July, the cash call had to be re-launched when B&B’s shares fell well below the 55p issue price and the lender had its credit rating cut by Moody’s.
Shareholders eventually took up just 28% of their rights in August, leaving underwriters Citigroup and UBS with around 72% the stock.
Legal moves have now been launched to secure compensation for 1,200 shareholders who responded to the fundraising and have since formed the Bradford & Bingley Rights Issue Action Group.
Members of the group claim they were misled by B&B, which had claimed that a successful fundraising would give it a strong capital position.
It is understood that any claim will be made against the directors of B&B at the time of the rights issue and the company itself, which is now Government-owned.
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