B&B wins backing for troubled rights issue

B&B's success in winning shareholder support came ahead of today's deadline for HBOS' troubled cash call.

Last night fears were growing that between 15 and 20 per cent of HBOS's 4 billion rights issue will be left with underwriters.

HBOS's army of two million small shareholders speak for 27 per cent of the company.

City analysts said yesterday that private investors were much less likely than the institutions to support the rights issue because of tighter demands on their money in gloomy economic conditions.

One analyst said: "I would be very surprised if all the small shareholders declined to take up their rights, even given the current market price of the shares.

"That's because many vote out of loyalty, not just for commercial reasons. My guess is that between 15 and 20 per cent of the rights issue will be left with Morgan Stanley and Kleinwort Dresdner (the underwriters]."

Even with yesterday's 5 per cent share price bounce at HBOS to 268.75p, the stock is still trading below the 275p rights issue discount price.

The speculation ahead of today's 11am deadline for HBOS came after 93 per cent of Bradford & Bingley shareholders voted in favour of that bank's twice-restructured rights issue yesterday. Just 3 per cent voted against at the EGM at the Sheffield Arena.

Edinburgh-based Standard Life Investments (SLI) supported the move, but fired a warning shot across the bank's bows at a sparsely-attended EGM.

SLI is one of B&B's biggest shareholders with a 5 per cent-plus stake.

Guy Jubb, head of corporate governance at SLI, said: "We look to your board to take steps to restore value to our clients' shareholdings in Bradford & Bingley. On this account we, and no doubt your other shareholders, will hold your board to account."

Although B&B, Britain's largest buy-to-let lender, has 930,000 retail shareholders, only 56 investors attending the event in the cavernous 12,000-seat arena.

B&B has been forced to overhaul its rights issue plan twice, first after a profit warning and the surprise departure of its chief executive and most recently after a downgrade from credit rating agency Moody's this month prompted US private equity investor TPG Capital to pull out of buying a significant stake.

Rod Kent, B&B's chairman, told the meeting: "We completely understand it has not been a comfortable process for shareholders, customers and employees. It will pass. If we keep our heads, we will trade through it."