TPG, the US private equity group poised to become a 23 per cent shareholder in Bradford & Bingley, is willing to bring in senior managers with banking expertise on a temporary basis if its stake purchase is approved by investors next week.
B&B wants shareholders to approve a £258m rights issue at 55p plus a £179m investment by TPG, aimed at injecting £400m into the UK lender to help repair its battered balance sheet.
But B&B’s plans have proved controversial with shareholders unhappy TPG has been brought on board.
TPG on Monday set out on a charm offensive round the City and met three of B&B’s biggest shareholders to talk about its plans. It will hold more meetings this week.
TPG, which has taken stakes in eight banks, including investing $7bn (£3.5bn) in Washington Mutual, has made clear it is prepared to parachute in two key managers on a temporary basis to help stabilise B&B while it looks for a new chief executive. The bank has hired Odgers, the headhunter where former MP Virginia Bottomley works, for the chief executive search.
Rod Kent, acting executive chairman, is seen as unpopular with investors and is expected to step down.
TPG is waiting to see whether B&B shareholders approve the deal at an EGM on July 7 before it will talk in detail about its plans.
Last week Clive Cowdery, the financial entrepreneur, decided against putting forward an alternative fundraising proposal to B&B, blaming the “entrenched” attitude of the bank’s board. Mr Cowdery was seeking to do due diligence but his request was rebuffed. He is unlikely to return with a rival offer.
In the absence of an alternative option, institutional investors have indicated they will vote through the TPG deal. About 40 per cent of B&B’s shareholders are retail investors and it is unclear how many will vote. The UK Shareholders Association said retail investors should consider voting against the TPG deal.
Roger Lawson of the association said: “In our view they [the B&B board] have not provided adequate explanations for why the [Resolution] proposals were unacceptable, and have not given Resolution the opportunity to clarify their proposals further.”
B&B shares rose 1¼p to 64½p, above the rights issue price.