And why, for that matter, is HBOS – suffering from the same liar loan/buy-to-flip virus – trading just 4p lower, bang on its own “rescue” refinancing price of 275p?
Think about it.
Bungling chief executive Steven Crawshaw agrees a statement back in April pooh-poohing some nonsense in the press saying Bradford & Bingley is talking to Citi planning a rights issue.
So then a month later B&B decides to have a rights issue after all at 82p-a-share, coincidentally using Citi as adviser. Crawshaw exits stage left.
Then the bank discovers that its management information is weeks out of date, causing the underwriters to claim a material adverse change. Refinancing collapses.
A re-refinancing is patched together with gung-ho private equity players TPG Capital at a new floor price of 55p – only for meddlesome Clive Cowdery to appear, in cahoots with the bank’s leading institutional investors, promising to pay 72p a share. Chairman Rod Kent dismissed that offer. Bizarrely.
Then, having looked at the books in detail, TPG decides to walk, the excuse being that Moody’s has downgrade of B&B’s credit rating.
The FSA steps in with a Plan C, instructing a group of institutions to step in where TPG had stepped out.
Look at the names: Legal & General, M&G, Standard Life, Insight (part of HBOS). These are the investors who wanted to back Mr Cowdry’s plan. Maybe they will be more careful about what they wish for in future.
This is the Old City in action. A lifeboat has been launched here.
B&B would be a former bank, but for the Bank of England’s Special Liquidity Scheme.
This is not advice to depositors to remove their funds. An implicit government guarantee covers all those banking with the likes of B&B. But if you own the shares, sell them. Now.
Related links
B&B shares slide after TPG withdraws – FT.com