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Is Bradford And Bingley On The Brink?

While it has been common knowledge in the City for some time, Bradford and Bingley seem to be hitting some serious turbulence with regards to their attempted fund raising. The shares took a sharp lurch downwards just before the close of markets today with many now questioning whether the recently announced £300 million fund raising will still go ahead.

The shares are now trading at 114p against the rights issue price of 82p (the price at which new shares are being offered to shareholders), leaving little room for disappointment in the short term. If the shares were to fall by anther 20% prior to the 11th July (the day when shareholders must decide whether to take up their new share allocation) it would put the fund raising in jeopardy.

Bradford and Bingley have always been seen as one of the weaker Banks in the UK due to its heavy exposure to the buy-to-let market â€" a market which is under serious pressure at the moment. While the recent Bank of England £50 billion asset swap offer has taken some of the pressure off the banking sector, Bradford and Bingley still need this extra £300 million funding to strengthen their balance sheet. What would happen if this failed is anyone’s guess.

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