B&B lifted by new hopes of takeover

B&B shares jumped 3 ¼p to 31p — a rise of 12% — amid reports that the Financial Services Authority is looking for white knight bidder to take it over.

Santander, the owner of Abbey and recent buyer of Alliance & Leicester, ING, the Dutch insurer that runs online bank ING Direct, and National Australia Bank, which owns Clydesdale and Yorkshire banks, all seemed to rule themselves out as bidders last night.

The City regulator sounded out the three institutions after B&B's credit ratings were cut last week and in the wake of the £12billion rescue of Britain's biggest mortgage lender HBOS by Lloyds TSB.

B&B insisted it was not in take­over talks: "We are not talking to any bank. Our funding is solid and we are well capitalised."

Shares in the bank have fallen from a peak of 524 ½p in May 2006 losing almost 90% of their value.

The former building society floated in late 2000 when 2.7million former members were given an average of 250 shares each. It still has more than 800,000 small shareholders.

The bank had to rebase its £400million rights issue twice this summer and ending with a take-up of 27% of the shares. That left the rump to be taken up by the underwriters and five rival High Street banks. The rights issue was at 55p, almost twice the current share price.

Following the nationalisation of Northern Rock and takeovers of Alliance & Leicester and HBOS, B&B is the last remaining former building society left on the stock market.

More than 85% of the bank's mortgage lending is in the buy-to-let or self-certified markets that are not only seen as riskier but which have also dried up as the credit crunch has extended into consumer spending.

B&B recruited former Alliance & Leicester boss Richard Pym as its new chief executive last month after Steve Crawshaw quit for health reasons ahead of the rights issue.

Many analysts believe Pym's main task is to prepare the bank for sale.