B&B shares rise on takeover speculation

| September 22, 2008 | 0 Comments

Shares in Bradford & Bingley (B&B) rose this morning amid speculation that the Financial Services Authority (FSA) has been holding talks with potential buyers.

In early trading, shares in the UK’s biggest buy-to-let lender rose 15% to 32p. Shares in B&B have lost over 90% in value over the last year.

Like other banks, B&B sought to raise extra cash after being hit by the credit crunch. It has had a difficult few months after two attempts at fundraising failed and has also suffered due to the property market slowdown.

Last month, the group posted a loss of £26.7 million for the six months to the end of June. The result compares with a pre-tax profit of £180.4 million in the same period of 2007.

The steep rise came largely as a result of an increase in the number of mortgages in arrears of three months or more.

According to a report in the Sunday Telegraph, Spanish bank Santander, which owns Abbey, has been approached by the FSA with regard to a takeover of B&B. Santander recently bought Alliance & Leicester.

The Sunday Telegraph also said the FSA has contacted Dutch banking group ING and National Australia Bank, owner of Yorkshire and Clydesdale banks.

However, according to The Times, it is understood that neither NAB nor Santander would be willing buyers for B&B while ING’s interest is still unclear.

Over the weekend, B&B said it is not in takeover talks or in financial difficulty and is unaware of anything in connection with other banks, according to The Times.

According to Sandy Chen, Panmure Gordon banking analyst, a lack of firm interest was not a good sign and that the uncertainty may even result in B&B customers withdrawing funds out of the bank.

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