Investment group Resolution in talks with B&B
Resolution is in discussions with leading investors at Bradford & Bingley (B&B) about injecting £400 million ($787 million) into the troubled UK lender.
B&B shares were up 15% in early trading today following the news.
B&B is subject to criticism with its 4 biggest shareholders, Prudential’s M&G, Standard Life, Legal & General and Insight and has invited Clive Cowdery, who runs Resolution, to form an alternative proposal to replace the Texas Pacific Group (TPG) capital injection and restructured rescue rights issue.
Financier Clive Cowdery has built up a 2.9% stake in B&B and has set it his sights on consolidating the banking sector. He is considering a £2 billion plan to snap up a small amount of banks and mortgage books.
Fifteen possible targets have been identified by Resolution including Northern Rock, Alliance & Leicester, Bristol & West, Paragon Kensington Group, and the £17 billion in mortgage books held by investment banks such as Deutsche Bank, Credit Suisse, and Merrill Lynch.
Mr Cowdery, who is believed to be worth £130 million, established Resolution four years ago and built it into an FTSE 100 insurance group that was bought for £5 billion earlier this year by rival Pearl. However, Cowdrey has retained ownership of the Resolution brand.
Mr Cowdery held talks with B&B’s chairman Rod Kent at the end of last week but the plan was rejected, stating that it would mean Resolution, in effect, taking control of the company.
B&B said it aims to proceed with the planned rights issue and investment by US private equity firm TPG.
Earlier this month, shares in B&B tumbled by 30% after it shocked investors by issuing a profit warning.
It made an £8 million pre-tax loss in the first four months of 2008, compared with £108 million profits the same time last year. B&B said problems with its buy-to-let mortgages as homeowners struggle to repay loans, are the root of their problems.