Bradford & Bingley sets rights issue

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

B&B, which specialises in buy-to-let mortgages, said the fully underwritten issue of 16 new shares for 25 existing shares would be priced at 82 pence per share, a 48 percent discount to Tuesday's 158.75 pence closing price.

The move is the latest in a series of fundraisings by banks across the world as they seek to rebuild their capital reserves following writedowns of risky assets triggered by the global credit crunch.

Royal Bank of Scotland announced a 12 billion pound rights issue last month, followed by HBOS, the country's biggest mortgage lender, which raised 4 billion pounds.

B&B said the proceeds would be used to boost its target Tier 1 capital ratio - a key measure of capital adequacy - to between 8 and 10 percent, it said.

"The proceeds of the rights issue will strengthen the group's capital position and will mitigate the impact of the previously announced reductions in the value of certain of the group's treasury investments," it said in a statement.

B&B said it continues to trade in line with its April 22 trading statement, but it will pay its interim dividend, due in October, in shares instead of cash.

"Taking into account the rights issue and writedowns announced in the group's Interim Management Statement released on 22 April 2008, the group would have had a pro-forma Tier 1 ratio of 10.1 percent and a pro-forma Core Tier 1 ratio of 9.2 percent as at 31 December 2007," it said.

B&B is targeting underlying dividend cover of between 2 and 2.5 times underlying earnings over the medium term, it said.

(Reporting by Chris Wills and Mark Potter, editing by Will Waterman)

($1=.5141 Pound)