Banks face £50m loss for B&B rescue

9 July 2008

The UK's largest high street banks could suffer losses as a result of backing failing lender Bradford & Bingley.

The mortgage lenders biggest shareholders have joined forces with the six high street banks as part of a plan to raise £400 million to buy back shares.

Standard Life, Legal & General, Prudential and Insight will pay £150 million for their shares, with HSBC, Lloyds TSB, HBOS, Barclays, Abbey and NatWest owner Royal Bank of Scotland adding another £150.

However, according to the Daily Mail, analysts remain unconfident about the recovery of Bradford & Bingley.

Forecasts from Bradford & Bingley have been slashed by the City from 55p to 24p.

As the investors are buying shares at 55p both groups are currently down by £50, the newspaper suggests.

Citibank and UBS have also agreed to buy the new shares and the Financial Services Authority (FSA) is working with the parties involved to avoid a repeat of the recent Northern Rock problems.

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