B&B taps market – will A&L follow?

Bradford & Bingley now rattling the tin to shareholders for an extra £300m. And where does this leave Alliance & Leicester, which has announced a further £192m of subprime-related writedowns?

Yet another U-turn in the financial sector. Just a month after denying rights issue rumours, Yorkshire lender Bradford & Bingley (B&B), which has been hit by the frozen wholesale markets and some writedowns on complex derivatives, is now rattling the tin to shareholders for an extra £300m with a heavily discounted share offer.

B&B is keen to present the reversal as an opportunistic boost to its (still relatively strong) capital base, with CEO Steven Crawshaw claiming current market stability affords "the right moment to launch a rights issue, not in the middle of a maelstrom". The move was "badly handled but sensible", agreed MF Global Securities' Simon Maughan, grudgingly.

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Will Alliance & Leicester be next?

Where does this all leave Alliance & Leicester (A&L), which has just announced a further £192m of subprime-related writedowns? JP Morgan analyst Carla Antunes de Silva asserted last month that A&L's unsustainable' business model would prevent the lender funding itself from the wholesale markets. Despite extending its liquidity reserves, according to George Hay on Breakingviews, A&L "still needs to strengthen its balance sheet and should raise equity soon". Listen out for denials

BB: 12m change 65%

AL: 446p; 12m change 60%

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