Holders’ anger over wipeout

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The rights issue was B&B's third attempt to raise capital, including an aborted huge cash injection from TPG, the US private-equity firm.

In the end, four of B&B's largest shareholders (Standard Life, Insight, Legal & General and Prudential) stepped in publicly to say they would support the new share issue at 55p a share.

Those shares were suspended on the stock market this morning, having closed last week at just 20p.

The Treasury announced that it will produce a so-called compensation order which could theoretically mean some kind of a payout to shareholders. Investors are sceptical this will amount to anything.

Standard Life is B&B's largest shareholder with a 9.6% stake. It is followed by the banks that supported the rights issue and lead underwriter Citigroup, which has 4.7%, Barclays with 7% and HBOS 6.8%.

Private punters account for around 40% of B&B's equity, most getting free shares when the building society demutualised in December 2000.

A spokesman for Legal & General, holder of 1.7%, said: "We are disappointed that a well-capitalised bank, which in normal circumstances could have been expected to trade through the current market environment, has been nationalised."

He declined to say if the insurer was looking at taking legal action.

Bizarrely, the planned merger of Lloyds TSB and HBOS would have created B&B's single largest shareholder.

The two banks were among the six High Street lenders who sub-underwrote B&B's £400 million rights issue in July.

HBOS also owns Insight Investment Management, one of the original supporters of the rights issue. Between them these three held 13.1% of B&B's equity.