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Note: Third rights issue in a row for UK bank is shunned.
The poor response of investors to Bradford & Bingley's rights issue completes an ignominious hat trick of dismal capital-raisings from UK banks.
Investors took up just 28% of the L400 million-worth of new shares on offer, leaving the deal's underwriters led by Citi and UBS and including a syndicate of the UK's biggest banks stuck with the rest.
Although the take-ups for the recent rights issues of HBOS and Barclays were worse, at 8.3% and 19% respectively, underwriters were able to escape footing the bill thanks to a bounce in the share price of the former and the clever structure of the latter. B&B's syndicate, however, has had to pledge to hold the stock, worth about L320 million, for almost three weeks before trying to offload it.
Lloyds TSB, HBOS, HSBC, Royal Bank of Scotland and Barclays have sub-underwritten about L120 million-worth of stock and four large UK fund managers Standard Life, Legal & General,...