B&B bankers stuck with rump

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B&B bankers stuck with rump

22/08/2008 10:46

LONDON (Reuters) - Banks supporting a key cash call at Bradford & Bingley said on Friday they would buy the 72 percent of shares not placed in the bank’s rights issue after a languishing price made it impossible to find other investors.

Investment banks Citi and UBS were left with the bulk of the mortgage lender’s 400 million pound twice-restructured rights issue when it closed Friday with shares hovering just above a deeply discounted 55p price.

Only just under 28 percent was sold to shareholders.

They had until Friday’s close to place the rump, or remainder of the stock, but B&B shares have languished well below 55p for much of the week.

B&B said on Friday the two banks and sub-underwriters would be subscribing to the remaining 597 million shares at 55p each -- above shares trading on Friday morning around 54p -- after telling the lender no buyers were likely to emerge.

The lenders also confirmed a lock-up agreement under which they will not dispose of 426 million shares for 20 calendar days from and including Friday.

Sources familiar with the matter told Reuters on Thursday that UBS and Citi were likely to fall back on sub-underwriting agreements, including a deal with six clearing banks -- HSBC , Lloyds TSB , HBOS , Barclays , Santander’s Abbey and Royal Bank of Scotland .

Citi and UBS themselves are expected to end up with as much as 75 million pounds’ worth of shares.

The clearing banks could end up with stakes worth as much as 4 percent each for larger banks participating in the deal, the sources said.

One of the sources had also said all institutions taking part in the sub-underwriting have signed up to a 20-day lock-up.

(Reporting by Clara Ferreira-Marques; editing by Sue Thomas)

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