The banks and institutions which will back Bradford & Bingley’s 400 million emergency capital raising are stepping up the search for a new chief executive of the stricken bank in a bid to stop the slide in its share price, The Telegraph reports.
The move comes as B&B fell a further 8 to 34p. At this price, few of B&B’s shareholders are likely to take up their rights in the rights issue, which is priced at 55p a share. If shareholders want to increase their stake they could buy shares more cheaply in the market.
If B&B’s shares continue to trade at their current level, the high street banks and institutional investors who have agreed to sub-underwrite the rights issue will take an immediate loss of more than 133 million.
The group of underwriters and sub-underwriters are expected to agree not to flood the market immediately with B&B shares but to hold them. This would mean the six high street banks – HSBC, Lloyds TSB, HBOS, Barclays, Abbey and Royal Bank of Scotland – underwriting 230 million of the capital raising will end up owning a third of B&B.
“The key is personnel,” says another party involved in the underwriting. “We have got to bring in a new chief executive as soon as possible.”
B&B’s board, headed by chairman Rod Kent, has been using search firm Odgers to find someone to step into the role of chief executive. But sources close to the bank say it has been hard to find a suitably heavyweight candidate because the future of B&B is not clear.
Now Standard Life, Legal & General, Prudential and Insight, the four big B&B shareholders which last week stepped in to support the capital raising after Texas Pacific Group walked away, are also actively participating in the search, as are Citigroup and UBS, B&B’s brokers, which have agreed to do all of the first-line underwriting.
Some analysts believe B&B will have to be taken over by a larger rival in a deal orchestrated by the Financial Services Authority.