The UK’s largest high street banks could suffer losses as a result of backing failing lender Bradford & Bingley.
The mortgage lenders biggest shareholders have joined forces with the six high street banks as part of a plan to raise 400 million to buy back shares.
Standard Life, Legal & General, Prudential and Insight will pay 150 million for their shares, with HSBC, Lloyds TSB, HBOS, Barclays, Abbey and NatWest owner Royal Bank of Scotland adding another 150 milion.
However, according to the Daily Mail, analysts remain unconfident about the recovery of Bradford & Bingley.
Forecasts from Bradford & Bingley have been slashed by the City from 55p to 24p. As the investors are buying shares at 55p both groups are currently down by 50.
Citibank and UBS have also agreed to buy the new shares and the Financial Services Authority (FSA) is working with the parties involved to avoid a repeat of the recent Northern Rock problems.