Bradford & Bingley Plunges 21%

123jump.com Staff
02 Jun, 2008
New York City

Bradford & Bingley plunges 21% after it agreed to sell 23% of the company to a private equity firm TPG. The deal to take a stake in the lender was agreed at 33% discount to the Friday closing price. Home mortgages issued in April fell to 58,000 in April from 63,000 in March according to the data released by the Bank of England.

[R]2:00PM New York, 7:00PM London - Bradford & Bingley stock plunges 21% after it agrees to sell 23% stake in the company at a 33% discount to TPG.[/R]

London stock indexes fell on a spate of negative news as Bradford & Bingley announced that it will sell its 23% stake to the buyout firm TPG Inc.

The Bank of England reported that mortgages issued in April fell amid tougher credit conditions and falling house prices.

Market sentiment

In London trading FTSE 100 declined 0.76% or 45.9 at 6,007.60.

Of the 103 FTSE 100 stocks 23 gained, 78 declined, and 2 were unchanged. Tullow Oil led advancers in the index shares with a rise of 2.53% on rising energy and metal prices.

Bradford & Bingley to sell 23% stake to TPG, stock fell 22%

Bradford and Bingley reported today on its website that TPG Capital Inc has agreed to invest £179 million and become a strategic investor with a 23% stake in the lender.

The lender believes that a restructured Rights Issue will raise approximately £258 million and, together with TPG’s investment, will raise additional capital of £400 million, net of expenses. The shares will be issued at an offer price of 55 pence per share at a discount of 33%.

Bradford stock closed 21% lower to 67 pence, but above the rights offering price of 55 cents to the buyout firm TPG.

According to the statement, underlying profits for the first four months of the year was £56 million compared to £108 million the same period a year ago. The lender also announced the appointment of Rod Kent as executive chairman after Steven Crawshaw stepped down as the Group Chief Executive.

Mortgage approvals fall to 58,000 in April

The Bank of England reported today that the number of mortgages for house purchase declined from 63,000 in March to 58,000 in April on tougher credit conditions and falling house prices.

Also net lending on homes was £6.4 billion in April compared with £6.7 billion in the previous month, while net credit card lending declined to £74 million in April from £396 million a month earlier.

OFT raids Barclays, RBS over price-fixing

The Office of Fair Trading has seized documents and phone records of Royal Bank of Scotland and Barclays as part of an investigation into alleged anti-competitive behavior over pricing of loans. The news was first reported by the Financial Times.

Gainers & Losers

Tullow Oil led advancers in the FTSE 100 index shares with a rise of 2.53% followed by increases in Compass of 2.40%, in British Energy of 1.91%, in Rio Tinto Plc of 1.90%, and Xstrata Plc of 1.86%.

Tullow oil rose after crude oil rose as much 1.7% today. Other commodity stocks gained after silver futures for July delivery rose 0.5% to $16.955 an ounce. Gold futures for August delivery also gained 0.8% at $898.50.

BHP Billiton advanced 1.78% and Kazakhmys Plc rose 1.12% as a result.

HBOS Plc led decliners in the FTSE 100 index shares with a drop of 10% followed by losses in London Stock Exchange of 6.67%, in Imperial Tobacco Plc of 6.20%, in Alliance & Leicester of 5.23%, and in First Group Plc of 4.06%.

Standard Chartered fell 2.72% and Barclays shed 2.53%. Persimmon fell 2.96%, Hammerson slipped 2.575 and Home Retail Group slumped 2.56%.

World markets

In Tokyo Nikkei 225 Index closed higher 101.60 or 0.71% to 14,440.14, in Hong Kong Hang Seng index increased 298.24 or 1.22% closed to 24,831.36. In Australia ASX 200 index higher 7.60 or 0.13% to close 5,662.30. In Malaysia KL Composite index decreased 13.61 or 1.07% closed to 1,262.49.

In South Korea Kospi Index decreased 4.49 or 0.24% to close at 1,847.53, in Thailand SET index closed lower 23.43 or 2.81% to 810.22 and Indonesia JSE Index edged decreased 16.58 or 0.68% to 2,427.77. Sensex index in India decreased 352.39 or 2.15% to 16,063.18.

In London FTSE 100 Index closed lower 45.90 or 0.76% to 6,007.60, in Paris CAC 40 Index decreased 79.07 or 1.58% to close at 4,935.21 and in Frankfurt DAX index closed lower 88.02 or 1.24% to close at 7,008.77. In Zurich trading SMI increased 44.41 or 0.59% to close at 7,555.70.