Is Bradford and Bingley on the verge?
As the share price of Bradford and Bingley moves lower and lower, hitting an all time low of 18p today, there are grave concerns that we have another Northern Rock on our hands. Much like Northern Rock, the group is very dependant upon money markets to fund the business and it is struggling to raise funding to finance its everyday operations. The fall to 18p now leaves the group with a market value of under £300 million, less that the £400 million it raised at 55p a share just a few weeks ago.
Despite rumours of bailouts and the authorities pulling the strings behind the scenes there has been no call to arms and no bailout offer placed on the table. Despite interest over the past few months there is a growing belief that nobody will actually step forward to acquire the group if the demise were to continue. Rather than a complete overnight meltdown we seem to be watching the gradual death of the group - death by a thousand cuts.
However, it would be unwise to completely rule out a takeover or some kind of rescue package because the downside for the industry as a whole would probably be larger, if Bradford and Bingley was to fail, than the cost of acquiring the company.
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