Resolution walks away from Bradford & Bingley

RESTRUCTURING firm Resolution today walked away from its proposed £400m investment in Bradford & Bingley.

B&B is currently selling a 23% stake to private equity firm Texas Pacific Group (TPG) and carrying out a deep-discounted rights issue to boost finances hit by the credit crunch.

Resolution discussed a rival support package with B&B’s institutional investors, but its attempt to see the books have been blocked by the bank this week.

The investment firm withdrew its bid today, accusing the B&B board of taking an “entrenched” position which “prevented the constructive engagement necessary” to finalise its proposals.

Shares in B&B fell almost 20% after the announcement.

Resolution yesterday claimed backing from major investors holding 25% of the lender’s shares including Prudential and Legal & General.

It said its proposals offered a better price than B&B’s current fundraising plans, protected the rights of the group’s shareholders and offered “a clear strategic direction” the bank.

B&B’s board would have retained full control of the bank, with the voting rights of the institutional investors backing the Resolution plans limited to 29.9%.

Resolution intends to go ahead with plans to consolidate smaller banks hit by the financial turmoil despite the snub from B&B.

It said: “Resolution continues to believe in the consolidation of the smaller banks and lenders in the UK to create a new, larger and stronger bank… Following talks with market participants, it is confident that this consolidation is both achievable and desirable.

“Resolution will continue to explore this and other opportunities across the financial services sector.”

The withdrawal by Resolution leaves B&B on course with its current cash-raising plans, which must be approved by shareholders on July 7.