Bradford and Bingley's shares fell 20% this morning as formal details emerged of a £400m+ refinancing plan. Stage 1 involves an injection of £179 from new investo Texas Pacific Group (TPG). TPG acquires 23% of B&B's equity. Stage 2 is a rights issue to existing shareholders priced at 55p per share.
Rumours have been circling for several week's regarding the problems at Britain's biggest "buy to let" (BTL ) lender. B&B has a 20% share of the BTL market and this segment of the mortgage market was perceived to be particularly vulnerable to the property downturn.
An immediate casualty of the bank's troubles is chief executive, Steven Crawshaw. Crawshaw is apparently on sick leave suffering from angina. A fairly serious health complaint. Crawshaw made the mistake of denying the need for a rights issue only 2 months ago. Now that the funding crisis is acute, he is an obvious candidate to join Northern Rock's Adam Applegarth on the banking career scrapheap.
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