UK bank plummets on share sale plan

Bradford & Bingley Plc, the United Kingdom's largest lender to landlords, suffered its biggest drop in London trading after the company announced plans to sell shares at a 33 percent discount and said the housing market is worsening.

Bradford & Bingley fell as much as 32 percent yesterday after the company slashed the price of its rights offering and said it will sell a 23 percent stake to TPG Inc for 179 million pounds. The company had a pretax loss of 8 million pounds, including one-time items, in the first four months of the year, and Chief Executive Officer Stephen Crawshaw, 47, resigned for health reasons, the bank said in a statement.

The injection by Fort Worth, Texas-based TPG to stabilize Bradford & Bingley comes almost nine months after the UK government bailed out Northern Rock Plc, the country's third-biggest mortgage lender. British banking stocks including HBOS Plc, the country's largest mortgage lender, fell on concern foreclosures will rise as the domestic housing market worsens.

"They are clearly signaling a deterioration in the housing market and overall credit quality," said Robert Talbut, London-based chief investment officer at Royal London Asset Management.

Bradford & Bingley, which provides one in five buy-to-let loans in the UK, fell as much 60 pence and was down 23 percent to 67.75 pence at 10:35 am, valuing the bank at 421 million pounds. The shares have dropped 75 percent this year, the worst performance in the FTSE All-Share Bank Index.

HBOS Plc fell as much 14 percent, the biggest decline since its initial public offering in September 2001, and traded at 366.25 pence at 10:35 am. Alliance & Leicester, which gets a quarter of its revenue from mortgages, declined 5.9 percent.

TPG, formerly known as Texas Pacific Group and started by David Bonderman and Jim Coulter, bought TXU Corp last year in the largest US leveraged buyout.

Agencies

(China Daily 06/03/2008 page17)