Tag : B -

B&B shares sank to 16.5 pence Friday, their lowest since the formermutual floated on the stock market in December 2000, beforerecovering to end down 5.9 percent at 20 pence.
The Daily Telegraph newspaper, also quoting unnamed sources, saidB&B would have to be nationalised in the coming days.
"We don't comment on speculation," said a Treasury official.
"The Financial Services Authority, the Treasury and the Bank ofEngland are in constant contact. The FSA is in contact with anumber of institutions," the official said. "They stand ready to dowhatever it takes to maintain financial stability."
FUNDING GAP
An industry source told Reuters that the Financial ServicesAuthority had sounded out potential buyers of B&B, but none of thebanks contacted would agree to take it over.
Another source familiar with the discussions said: "There have beendiscussions between B&B and the FSA and they are still looking atprivate sector solutions."
The FSA declined to comment, while a B&B spokesman said the companydid not comment on "market rumour and speculation," adding that thebank was one of the best capitalised in the UK.
B&B, which specialises in lending to landlords in the so-called"buy to-let" market and in self-certificated mortgages, has beenhit by a jump in funding costs as the credit crunch pushed up thecost of wholesale borrowing.
"B&B's problem is the funding gap, and then the actual balancesheet isn't very high quality," said Magnus Mathewson, bankinganalyst at stockbroker Hichens, Harrison.
"Self certification and buy-to-let mortgages are relatively new,and no one really knows how they're going to behave in a downturn,"he said.
B&B is heavily dependent for its funding on wholesale borrowing,which has soared in cost as risk-averse banks opt to hoard theircash in the wake of the credit crunch.
B&B has a loan-to-deposit ratio of 167 percent, meaning that nearlyhalf its loan book is funded through increasingly expensivewholesale borrowing, Mathewson said.
Credit default swaps (CDS) on five-year senior B&B debt were bid at1,500 basis points Friday but with few trades, one trader said.That means it would cost 1.5 million euros ($2.2 million) a year toprotect against the default of 10 million euros of B&B debt.
In June B&B raised 400 million pounds in an emergency rights issuethat had to be overhauled twice, first after a profit warning andthen because of a credit rating downgrade.
B&B is the last of a group of former mutual lenders -- previouslyowned by their savers and borrowers -- that floated in the 1990s toremain independent.
(Additional reporting by Steve Slater, Jane Baird and David Clarkein London, Sumeet Desai in Washington, editing by Sami Aboudi)