Trouble at Bradford & Bingley
LONDON - The UK Financial Services Authority (FSA) has reportedly launched an insider trading investigation around shares of Bradford & Bingley. The UK high street bank has been squeezed by US subprime debts and the continued credit crunch. But it saw a 14% decline in its share price in the three days before a dire profits warning that ultimately led to the collapse of a rights issue intended to shore up its capital. The failure of the rights issue ultimately led to the purchase of a stake in the bank by private equity group Texas Pacific days later.
Aside from the insider trading inquiry, the bank has also witnessed internal changes at the top in the past month. Chief executive Steven Crawshaw resigned, citing a heart complaint. Shareholders are now reportedly pressuring chairman Rod Kent and other senior executives to step down. The FSA has also asked the big five UK banks - HSBC, Barclays, Royal Bank of Scotland, Lloyds TSB and HBOS - to help sub-underwrite the bank's struggling assets in a capital-raising exercise for a second rights issue.
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