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June 29, 2008    

Cowdery walks away from Bradford & Bingley

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by Kay Murchie

Financier Clive Cowdery, who runs Resolution investment group, has walked away from Bradford & Bingley (B&B) after he planned to pump £400 million into the troubled UK lender.

Following the news, shares in B&B plummeted 19% to an all-time low of 64½p on Friday.

Mr Cowdery, who is believed to be worth £130 million, 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.

Mr Cowdery accused B&B of obstructing all his efforts to put his plans forward and said the entrenched position of the board of B&B has prevented the constructive engagement necessary to finalise this proposal.

As a result, Resolution believes it cannot responsibly proceed with its proposal to B&B’s investors, said Mr Cowdery.

Over the weekend, B&B’s largest shareholders: Prudential’s M&G, Standard Life, Legal & General and Insight have been pushing for Mr Cowdery to return, while at the same time pushing for the departure of Rod Kent, B&B’s executive chairman.

The shareholders are looking for an alternative proposal to replace the Texas Pacific Group (TPG) capital injection and restructured rescue rights issue.

One of the shareholders said Resolution’s plans make strategic sense both for the future of the company and for us as shareholders.

Mr Kent rejected the proposal as it would mean Resolution, in effect, taking control of the company. The company also said that Cowdrey had failed to answer several basic concerns that it had about the plans.

B&B has told its shareholders that they now had to vote for both the rights issue and the Texas Pacific Group cash injection to go ahead at a meeting on 7 July.

Last week, the Institutional Voting Information Service (IVIS), which is operated by the Association of British Insurers (ABI) has warned there are “breaches of sound governance” in the proposals for Bradford & Bingley’s (B&B) rights issue and sale of a 23% stake to Texas Pacific Group (TPG).

The IVIS has placed an ‘amber top’ on the proposals, which means it is advising shareholders to apply considered judgment before voting on the resolutions.

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