Private Investor: B&B 'lifeboat' tows my punt to safer water
Saturday 05 July 2008
Just when I thought the worst for the banks was over, the news comes through that Bradford & Bingley has lost another investor. That's twice the rescue rights issue has failed. To borrow from an old Bradford & Bingley advertising campaign and the even more venerable Oscar Wilde, "To lose one rights issue, Mr Bradford and Mr Bingley, may be regarded as a misfortune; to lose both looks like carelessness." I felt a little queasy.
When the developments became public on Thursday night I really was pretty worried for my small punt in the mortgage bank. A few weeks ago, in the wake of the collapse of the first recapitalisation, I had made the brave decision, so I believed, of buying at 64p, just about the bottom of the market in B&B shares.
The shares then recovered, on the back of the interest in the company from Texas Pacific Group, to above the 70p mark, where I was reasonably happy. When they advanced some more, maybe I should have sold, but things seemed fairly secure. The worst, maybe, was over for our banks.
That was before Moody's, the credit-rating agency, decided to beat Bradford & Bingley up with a debt downgrade. That, in turn, gave Texas Pacific cause and reason to get out of the deal. TPG and its £400m walked away from our beleaguered friends in the North. That was the gist of the news I heard on Thursday evening, and I truly feared the worst. Like Northern Rock, the news had been leaked to the BBC at the worst possible time for a vulnerable bank, with potentially devastating consequences. I would hope that the stentorian Treasury Select Committee might turn its attention to what has been a side issue – the leaks about the Rock and B&B.
What was going to happen next? The playbook was firmly in everyone's minds from the Northern Rock debacle. There would be a run on Bradford & Bingley, the shares would collapse, there would be the usual confusion from the "tripartite authorities" – the Financial Services Authority, the Bank of England and the Treasury – about who was in charge and what they should do.
There'd be general chaos surrounding the guarantee to investors and whether the state might back it up; there would no clarity on whether the bank might be nationalised; Richard Branson would pop up somewhere in a bowler hat making encouraging noises about buying B&B to expand the Virgin empire, and the usual suspects from the world of private equity would be sniffing around the corpse. In the end, Alistair Darling would end up on his hind legs in the House of Commons announcing another "temporary" nationalisation of a bank. The Barclays and HBOS rights issues would fail and most of the top people in the regulatory/supervisory world would tender their resignations. Oh, and I'd lose my stake in the bank.
But that, so far, anyway, isn't what has happened. Someone at the FSA wasn't asleep at the wheel, perhaps. Someone, maybe, at the Bank of England could see what was coming.
Whoever it was who managed to construct the "lifeboat" of institutional investors that saved Bradford & Bingley deserves the thanks of a grateful nation. I am certainly impressed.
This, like 1940 for the RAF, may have been the FSA's finest hour: "Never in the field of human finance was so much owed by so many to so few."
As it is, the worst that has happened is that the shares are down to about 55p and thus represent a reasonable punt for some future value in the broad, sunlit uplands (also Churchill's phrase, by the way). The only flaw, in the end, was the way the news was managed.
Which brings me to Barclays. In my inside jacket pocket, I have a form by which I agree to subscribe for my maximum entitlement in the open offer. I was ready to post it the other day when I glanced at the Barclays share price and noticed that the market price had slipped below the open offer price (282p).
Since then, it's recovered, but you can never be quite sure for how long. Basically, it's bobbing around the offer price mark, and it does make you wonder whether it's worth taking on the shares. I just hope that someone doesn't leak a nasty story about Bar-clays to the BBC on Thursday night.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
- 2 Stamford Hill council removes 'unacceptable' posters telling women which side of the road to walk down
- 3 Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
- 4 Alex Salmond: 'The rocks would melt with the sun before I'd ever set foot in the House of Lords'
- 5 Ice Bucket Challenge: US firefighter Tony Grider dies after participating in charity craze near power lines
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
Day In a Page
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize