Press Release Summary: The biggest buy-to-let bank of Britain, Bradford & Bingley today will issue a warning to the investors that the bank no longer sees any expectations to meet their profit targets.
Press Release Body: The biggest buy-to-let bank of Britain, Bradford & Bingley today will issue a warning to the investors that the bank no longer sees any expectations to meet their profit targets. Also, the bank made an announcement that their chief executive Steven Crawshaw quit from the bank last week. This was entailed due to his askance to the shareholders for pooling in more cash for improving the finances of the bank.
As reported by the BBC last night, Texas Pacific Group which is a private equity firm will is ready to invest £150m in B&B. this will be done in return for a 20% stake in the bank. With this investment, the cash call on the investors of B&B will be reduced to £250m. the bank will still gain more than the originally expected £300m from the issue of rights. All along, the Chief executive Crawshaw had denied all reports of rights issue by the B&B. but the issue was announced last month which was giving away new shares at a discounted price. This was done to raise £300m which was equivalent to one third of the market value of the bank at that time.
All this mayhem caused Crawshaw to step down due to the enragement which happened amongst the investors.
However, the immediate departure of the chief executive has been said to be due to "serious cardiovascular condition", according to a statement by B&B yesterday. The post will be taken for now by the Chairman Rod Kent. Crawshaw tried to draw support for his rights issue and for this, he even engaged in a busy investor road show.
The reports in newspapers on April 14 about the bank planning rights issue had been out rightly denied by the B&B bank. They made it clear that they were not intending to issue equity capital by any way like a rights issue.
With this denial, the investors had believed they would not be asked to pool in finances for the balance sheet of the bank. But only a month later, the board of B&B announced a rights issue to raise around £300m.
After two weeks of the last trade updating, the warnings are being issued. Even though the forecasts for 2008 were reduced substantially, the bank profits are likely to fall short of what was expected from it. This warning came in addition to the exit announcement of Crawshaw.
The shareholders in other banks will keep a close watch on the reactions of the warning that has been issued on the profits. This warning was issued against the hopes of those who thought the damages of the credit crunch were over.
Further details of the rights issue will be received by the shareholders of B&B. however there is concern that the shareholders may not take the discounted shares with a good outlook.
Small investors have a total share of around 40% in the bank. This is due to the initial form of the group as a building society. Few of them are being speculated to come and take up their rights.
Share prices fell to a record low last week and this triggered off a concern about the rights issue. Further depression of the B&B share price has been caused by the fund speculators who take complex bets on the outcome of the rights issue which has been announced. Please visit our website at http://www.firstchoiceloan.co.uk/
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