Bradford & Bingley maintains it has sufficient funds

| April 21, 2008 | 0 Comments
”Bradford

In the last week, Bradford & Bingley (B&B) has maintained that it has sufficient cash on its books to take it through until the start of 2009.

However, if current market conditions continue, it may have to follow Royal Bank of Scotland and raise funds through a rights issue to improve its financial position.

At its annual meeting tomorrow, many of its investors will undoubtedly be concerned about the strength of the former building society’s balance sheet.

B&B, who specialise in buy-to-let, has strongly denied it was planning a rights issue. However, it is believed that Steven Crawshaw, chief executive, wanted to raise about £300 million and planned to announce the move at tomorrow’s meeting.

The bank’s advisory team voted two-to-one in favour of the move but it is understood that the chief executive pulled the plug at the eleventh hour.

Unfortunately, the investment community may have no desire for further cash calls if RBS manages pull off its £12 billion rights issue. Other banks such as Alliance & Leicester and HBOS are believed to be considering their own capital raising so this could be bad news for them.

In February, B&B reported that pre-tax profits fell by half last year after a bigger-than-expected write-down of £226 million.

Earlier this year, the bank was the subject of rumours that it might suffer similar problems to Northern Rock because of its high reliance on wholesale funding.

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