Bradford and Bingley look for £300 million additional funding
Following in the footsteps of the Royal Bank of Scotland and HBOS, Bradford and Bingley are the latest UK bank to go to it’s shareholders for additonal funding. The planned £300 million rights issue will offer existing investors the chance to buy more shares.
Shareholders will be offered 16 new shares for every 25 they already own and the price will be 48 per cent below yesterday’s closing price. It is standard practice for a company to offer shareholders new shares at a discounted price and they are offered in proportionary amounts. For example, if you own 5 per cent of the existing shares you will be offered 5 per cent of the new ones.
Bradford and Bingley had previously denied, only last month, that it was planning to raise additional finds from shareholders.
Because Bradford and Bingley are Britian’s largest buy-to-let mortgage lender and it funded a large proportion of these mortgages from the money markets, it’s share price has fallen this year and Bradford and Bingley say the rights issue will bolster “Our position as one of the better capitalised banks in the UK.”
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