The chairman of Britain’s Financial Services Authority (FSA) says the regulator is closely monitoring Bradford & Bingley, the UK bank whose shares have slumped on concern about its business plan, Reuters reports.
Bradford & Bingley (B&B) increased its rights issue to GBP 400 million ($793.6 million) after US investor TPG Capital pulled out of buying a stake.
“We have taken a close interest in it,” says Callum McCarthy, FSA chairman. Asked whether the FSA would continue to monitor Bradford & Bingley closely, McCarthy replied: “Of course.”
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 government.
TPG pulled out of buying a stake in B&B after ratings agency Moody’s cut B&B’s debt ratings, triggering a clause allowing TPG to scrap the agreement. That prompted the FSA to step in to help ensure that an alternative financing plan was in place.
B&B had planned to sell TPG a 23% stake for 179 million pounds and raise 258 million through a rights issue. It will now seek a net 400 million pounds through the rights issue.
B&B says that under the enlarged rights issue, it had proposed issuing around 828 million new shares – some 57% of the enlarged share capital – and would offer shareholders 67 new shares for every 50 existing ones.