David Prosser's Outlook: Another banana skin for Bradford & Bingley

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The Independent Online

As benchmarks go, it's not the toughest. Bradford & Bingley hopes that its rights issue, concluded yesterday, will prove to have been more successful than the disastrous fundraising conducted earlier this year by HBOS. To remind you, it managed to persuade just over 8 per cent of shareholders to subscribe for their rights, and B&B will regard anything better as a success.

The former building society is about as accident-prone as they come. This, after all, is its third attempt to get a rights issue away, having abandoned the first two through a combination of bad luck and bad judgement. To add to its woes, B&B has this year lost a chief executive through ill health.

The good news for investors is that the rights issue is fully underwritten, though at a cost that should embarrass B&B's board, with more than 10 per cent of the fundraising reserved to pay the fees of UBS and Citigroup. And, of course, now this sorry episode is finally over, B&B can go back to doing the one thing that might improve shareholders' lot – finding a new owner.

If only. Everything has its price of course, but who on earth would want to buy Bradford & Bingley? This is a mortgage bank specialising in the wrong end of the market, its brand is devalued and its reputation in the City is shot.

Certainly, it's now very difficult to see B&B being taken out by another British bank – Lloyds TSB might have been interested once upon a time, but no longer. International interest may be more marked, though the appetite for cross-border banking deals is waning (A&L's link-up with Santander apart). Nor is private equity rushing to make an offer, having seen Texas Pacific offer to take a stake and then back away.

All in all, those 950,000 small shareholders who have had such a miserable time from B&B look likely to be stuck with the mortgage bank for some time yet.

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