Another Northern Rock?

Probably not but the travails of Bradford and Bingley are worth following closely. Britain’s eight biggest bank and the largest player in the increasingly fragile buy-to-let market is under severe pressure following yet another profits warning, the early departure of its CEO and the announcement of the sale of 23% of their equity to a private equity investor Texas Pacific Group. The BBC web site will be carrying plenty on this story over the coming days. Declan Curry has been reporting on this as the news came through and Robert Peston continues to break the stories ahead of the rest of the pack with his superb blog - he writes:

“A regulator also told me that, unlike Northern Rock last September, B&B’s is not suffering from a shortage of liquid funds that would imperil its future. He added that its balance sheet was not particularly weak, even without the injection of new capital.”

Bradford and Bingley’s exposed position in the buy to let market seems to be one of its key weaknesses at the moment. But the regulators will be in there swarming like wasps to make sure that the financial stavbility of the bank is better than when they failed in their regulatory duty with Northern Rock. This is little comfort for B&B shareholders asked to stump up for a rights issue and who have seen the price of B&B shares collapse since the middle of last year.