Bankers for Bradford & Bingley have been left to sell over 70% of its 400 mln pound cash call, the UK lender said, as it hired the former head of rival Alliance & Leicester to draw a line under its troubles.
The mortgage bank, which has seen a torrid three months since it first surprised the market with news of an emergency rights issue, said it had named City veteran and former A&L boss Richard Pym as chief executive with immediate effect.
Pym replaces Steven Crawshaw, who stepped down in June for health reasons as B&B struggled to push through the funding boost.
The embattled bank, forced to turn to investors for cash in the face of a fast-deteriorating UK economy, said on Monday investors took up only 27.8% of its fundraising.
Underwriters Citi and UBS now have until Friday to place the remainder of the cut-price, twice-restructured offering.
The outcome of the rights issue — latest in a string of capital injections for banks battered by the credit crunch and the broader macroeconomic slowdown — is in line with analysts' expectations, after B&B stock traded close to the rights price of 55p in the run-up to the deadline, and just above that as subscriptions closed on Friday.
Most of B&B's retail shareholders, who made up around 40% of the investor base before the rights issue, are not expected to have participated but four top shareholders — Standard Life, Legal & General, Prudential's M&G and HBOS's Insight — are understood to have taken up their share of the fundraising, roughly 13%.
The four had agreed to support Citi and UBS after a deal with U.S. private equity firm TPG fell through last month.
They had been expected to take up as much as 145 mln pounds of shares to back the underwriters, in a deal also supported by six of Britain's largest lenders — spreading the cost of propping up B&B over 12 institutions.
"We're all very big players. It's not a big concern to us," one source familiar with the matter said.
"The rights issue doesn't settle until the end of the week, so we have five days to place the rump. We'll see how much demand there is and then determine what we'll do."
HOPES OF STABILITY
The retail banks have agreed to take on up to half the rights issue or as much as 3% each of B&B. That number should come down, however, after take-up was stronger than expected at the time of the deal and with shares currently trading close to 55p, well above recent lows.
At 0804 GMT, the shares were trading flat at 54.75p.
If they took up their maximum, HSBC, Lloyds TSB, HBOS, Barclays, Santander's Abbey and Royal Bank of Scotland would be left with just under 20% of B&B's enlarged share base.
B&B has seen a turbulent few months, with its shares losing over three quarters of their value since January. But the bank and its investors hope Monday's appointment of veteran bank executive Pym should mark the start of its turnaround.
Though not one of the City's most aggressive chief executives, Pym is well-known to the City and widely seen as a safe pair of hands and a manager who should be capable of steering the lender through the worst of the crunch.
"It's good for people considering the placement to know who is going to run the company going forward," one banking source said. "It's clearly good that they have filled a gap."
Pym was part of JC Flowers' bid team for Northern Rock and would have been chief executive if the offer had succeeded.
A&L, where Pym worked for 15 years as finance director, head of retail banking and later chief executive, was sold to Spain's Santander last month.
B&B, which said there had been no material change in current trading since its June update, is due to publish first-half earnings on August 29. (Reuters)
