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Champers all-round? B&B hit

Are Mayfair’s finest having a crack at Bradford & Bingley?

The bank last week announced a £300m, 16 for 25 rights issue, priced and underwritten at 82p.  On Monday, the stock, which has lost more than half its value this year, shed a further 10 per cent.  The stock hit a new all-time low of 120p.

The falls mean that the stock is now trading below the theoretical ex-rights price of about 129p at the time the issue was announced. At Monday’s lows, the TERP is down to about 105p.  Still someway off the 82p pricing - but the discount to the TERP has narrowed from 36 per cent last Wednesday to 21 per cent. Will underwriters Citi and UBS be getting nervous?

Two, related, schools of thought on Monday.  One held that the sell-off was prompted by continued worries that the ailing UK housing market could prompt a slew of bad debts for the niche buy-to-let and self-cert lender. B&B said last week that it would use its improved financial strength to enhance its competitive position, writing “selective good quality business at attractive margins.” B&B’s exposure to troublesome areas is nothing new - but the lack of a signal from the company of a pause or pullback may have put the frighteners on a skittish market. The other camp was pointing fingers towards W1 citing suspicions that the hedge fund mob, already short the housing market and B&B, might be setting its sights on a revaluation of the rights.

So should someone be alerting the FSA?

Oh, wait a sec. Damian Reece, head business honcho at the Telegraph already has.  But he’s gunning for B&B, not rushing to their defence as the paper did with HBOS, hit by those nasty rumour-monguering bank robbers.

Team Telegraph issued an update on their complaint to the regulator over the weekend, noting that the FSA has come back to say that it doesn’t comment on individual firms. Reece wrote:

If the FSA’s reply to my letter means it won’t be investigating the affair then we will simply redouble our efforts to prove that our story was accurate.

If this case is not worthy of investigation then I don’t know what is. The FSA proved itself lacking, to say the least, over Northern Rock. Surely it’s not going to repeat the mistake again so soon.

Related links
The B&B rights issue statement
Lina Saigol: banks and capital raisings - FT.com

This entry was posted by Helen Thomas on Monday, May 19th, 2008 at 11:17 and is filed under Capital markets, Hedge funds. Tagged with . You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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Comments

  1. May 20   17:47 Posted by Prometheus [report]

    Investing is equities is laying out money today in the expectation of a return greater than guaranteed investments.

    Investing in equities involves assessing the intrinsic value of a company relative to it’s market value.

    It is impossible to value a company if the board are quite willing to lie to their shareholders and get away with it.

    Investors in Bradford & Bingley, HBOS and RBS over the last few months would have produced much the same results at the local casino.

    If you can’t value a company, look elsewhere.

  2. May 20   10:25 Posted by Alternative Investment Forum » Blog Archive » THE FINTAG NEWSLETTER @ 20 May 2008 [report]

    […] ftalphaville Are Mayfair’s finest having a crack at Bradford & Bingley? […]

  3. May 19   19:48 Posted by burnt quant [report]

    Could they just have said nothing - there is no requirement to comment on rumours.

    If they had told the truth what do you reckon would have happened? I reckon they would no longer be with us!

  4. May 19   16:53 Posted by Prometheus [report]

    .
    The often trumpeted disclaimer “shares can go up - as-well as down” does not indemnify directors of their duty to notify shareholders of any price sensitive information without delay.
    .

  5. May 19   16:26 Posted by Prometheus [report]

    .

    The Telegraph are right to pursue this, regardless of any mistakes they may or may not have made in the past..
    .
    How many small private shareholders bought shares in Bradford & Bingley on the back of their rights issue denial.
    .
    Bradford &Bingley have acted disgracefully in my humble opinion.
    .
    I’m just glad i was not tempted to buy Bradford & Bingley shares myself.
    .
    Have you ever bought shares in anything Helen ? ? ?

    Do you care about small time shareholders being misled ?
    .

  6. May 19   14:32 Posted by Monkey [report]

    How can the FSA being accused ot being lacking over the Crock???! They went through 129 lever arch files! 129! And poured over literally dozens of e-mails … what does Mr Reece want? Blood? Sweat? Tears? Be reasonable

This post is closed to further comments.