B&B in £300m rights issue

BRADFORD & Bingley has announced a £300m rights issue of shares to strengthen its capital position just a month after saying it did not need to raise more cash.

B&B has proposed a fully underwritten 16 for 25 share issue at 82p per share, a discount of 48%  to last night’s 158.75p closing price.

It said the move would strengthen its position at a time of “continued financial market dislocation”.

Last month the mortgage lender said it was “not intending to issue equity capital by way of a rights issue or otherwise”.

However it has now reversed its intentions as the affects of the credit crunch which has already seen it write down the value of its investments by around £350m.

Chief executive Steven Crawshaw, said: “The rights issue we have announced today will strengthen our financial standing, reinforcing our position as one of the better capitalised banks in the UK. The improved financial strength will ensure we are even better placed to pursue our strategy of providing high quality savings and mortgage products in a competitive market.”

It will pay its 2008 interim dividend, due in October, in shares.