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| B&B seeks £300m from shareholders | |
| (10 minutes later) | |
| Bradford & Bingley has become the latest UK bank to go to its shareholders for extra cash. | Bradford & Bingley has become the latest UK bank to go to its shareholders for extra cash. |
| The bank said it was planning to raise £300m in a rights issue that offers existing investors the chance to buy more shares. | The bank said it was planning to raise £300m in a rights issue that offers existing investors the chance to buy more shares. |
| It said the extra cash would strengthen its capital position and make up for some of its weakening investments. | It said the extra cash would strengthen its capital position and make up for some of its weakening investments. |
| As a big mortgage lender, Bradford & Bingley has been among those worst hit by the credit crunch. | As a big mortgage lender, Bradford & Bingley has been among those worst hit by the credit crunch. |
| WHAT IS A RIGHTS ISSUE? Companies issue extra shares to raise money They are offered to existing shareholders, usually at a discount to the current share priceShares are offered in proportion to existing holdings, so if you own 10% of the old shares you are offered 10% of the new ones Check Bradford & Bingley sharesCheck other banking shares | |
| The shareholders will be offered the chance to buy 16 new shares for every 25 they already own at a price 48% below their closing price on Tuesday. | |
| It follows plans for rights issues from its larger rivals, Royal Bank of Scotland and HBOS. Royal Bank of Scotland is seeking to raise £12bn while HBOS wants to raise £4bn. | |
| Bradford & Bingley denied as recently as last month that it was planning to raise extra cash from shareholders, but now says that the rights issue will reinforce, "our position as one of the better capitalised banks in the UK". | |
| Bradford & Bingley is Britain's biggest buy-to-let lender. | |
| Its share price has already fallen sharply this year as it was seen as one of the lenders that took a higher proportion of its funding from wholesale money markets rather than savers. | |
| Borrowing money in that way has become more expensive as a result of the credit crunch. |