UK bank slams rights issue rumors

14 April 2008

British lender Bradford & Bingley (B&B) has slammed rumors that it is planning an emergency bid to raise revenue.

The bank said in a statement that it had a "strong capital base", contrary to several newspaper reports on Sunday.

It had been suggested that B&B approached Citigroup to help with capital raising, due to difficulties that the firm was having on the money markets.

However, the long-term efficacy of such a scheme was greeted with scepticism by Lehman Brothers analyst Robert Law.

"The amounts the UK banks can raise through asset sales are relatively limited - it would be incremental to their balance sheets rather than transformational," he commented.

Concerns were also raised about the health of banking shares today - with the rumor-fuelled double digit drop of mortgage giant HBOS one day last month in the wake of the Bear Stearns crisis still fresh in many minds.

"I wouldn't be surprised if everyone goes down on the back of this," one banker told the Times.

Overall, B&B stock has fallen by 35 per cent so far this year - due in part to the firm's exposure to the rapidly-cooling buy-to-let market.

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