B&B: Broke & Borrowing?

(Times Online) -- Three weeks ago Rod Kent felt able to breathe a cautious sigh of relief. The chairman of Bradford & Bingley had secured the signatures of UBS and Citigroup on the underwriting of a £300million rights issue.

His denial a month earlier, ruling out just such a capital-raising, was embarrassing, of course, but at least now he had placed the bank on a firmer footing. Whatever happened, B&B would get its money, beef up its balance sheet and keep increasingly nervous banking supervisors at bay. The reputation of Mr Kent, who led the investment bank Close Brothers for 25 years, was still just about intact.

The relief was not to last, however. The board - and the underwriters UBS and Citigroup - had made the terrible mistake of basing their decisions on six-week-old management accounts, going only to the end of March. Only last week did they see the April numbers. The figures made grim reading, with the numbers of borrowers three months or more in arrears soaring to 8,333, and £1.1 billion of loans under threat. The net interest margin was narrowing, too, and there was the little matter of a £15 million mortgage fraud. To cap it all, Steve Crawshaw, the chief executive of six years, was stricken by a serious heart problem.

Meanwhile, the B&B share price had been falling day after day.

blimey thats a bit steep!

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