Regulator watching troubled UK bank
A branch of Bradford & Bingley in central London. The United Kingdom's main buy-to-let mortgage lender is the latest to announce losses causing share prices to fall dramatically. Photo: Daniel Berehulak/Getty Images
Monday July 07 2008
THE chairman of Britain's Financial Services Authority (FSA) said the regulator was actively monitoring Bradford & Bingley, the UK bank whose shares have slumped on concerns over its business plan.
Bradford & Bingley (B&B) on Friday increased its rights issue to £400 million (€500m), after US investor TPG Capital pulled out of buying a stake. "We have taken a close interest in it," FSA Chairman Callum McCarthy told reporters at a business conference in France.
The FSA is keen to avoid problems from the global credit crunch spreading across Britain's financial sector after the near collapse of British bank Northern Rock last year, which ended up being nationalised by the Labour government.
Persuaded
The 'Independent on Sunday' reported that at least six banks were understood to have been persuaded by the FSA that they should take part in the new fund-raising to rescue the troubled mortgage lender .
They include Lloyds TSB, HBOS, HSBC, Royal Bank of Scotland, Barclays and Abbey.
One source said: "The FSA could not allow B&B to go under -- this was a serious moment and everybody has pulled out every stop to save the bank."
The newspaper reported that Clive Cowdery, boss of the Resolution buyout fund, has turned down approaches from Bradford & Bingley's big four investors to return to the mortgage lender once its £400m rights issue is underwritten.
Meanwhile, the 'Sunday Independent' reported yesterday that Mr Cowdery, who sold Resolution for more than €6bn last month, was interested in Bank of Ireland's UK lender Bristol & West, which could be valued at more than €1bn.
He has not ruled out coming back to B&B at a later date, but will wait until after the rights issue is completed, for legal reasons.
Sources close to Mr Cowdery said the investors, Standard Life, Insight, Legal & General and M&G, were still interested in him taking a more active role to help Bradford & Bingley get out of its problems.
- Sudip Kar-Gupta
