Bradford & Bingley lost money in the first four months of this year, and will miss City profit forecasts by a mile, executive chairman Rod Kent revealed today as he slashed the price of its fund-raising.

Kent, who has taken over day-to-day running of the bank, said: "The last few weeks have been challenging, and this is a disappointing trading update reflecting a more difficult market environment. I understand shareholders' disappointment."

He also revealed that private-equity investor Texas Pacific Group (TPG) approached the bank a month ago, but the deal for it to take a 23% stake in return for £179 million was struck only "a few days ago".

B&B shares plunged 24% today, dropping 21p to an all-time low of 67¼p.

The hurried rejigging of the fundraising came hours after the bank's much-criticised chief executive Steven Crawshaw resigned through ill health. He had been leading the roadshows aimed at institutional investors on the aborted first rights issue until a few days ago.

TPG is paying just 55p a share, the same price as the new rights issue, which will raise £258 million, taking the total new capital raised to £400 million after expenses. Both the Bank of England and Financial Services Authority were kept closely involved as events developed over theweekend, with both regulators keen to ensure this was not seen as another Northern Rock fiasco.

B&B said it had swung from pre-tax profits of £107 million in the first four months of 2007 to losses of £8 million in the same period this year. Underlying profits, before toxic loan losses, halved from £108 million to just £56 million.

The move by TPG is likely to dampen takeover speculation at B&B, which had been seen as a target for a European bank wanting to move into the UK.

B&B is the UK's eighth-largest bank, the biggest lender in the buy-to-let market. As such, it has been hit by the downturn in the UK housing market, with investors no longer keen to buy newly built properties to rent out.

Today's profits warning is effectively the third this year and the former building society lost huge face with investors because it denied it had any plans for a rights issue on 18 April, only to launch its original £300 million fund-raiser less than a month later.

The original rights issue had been priced at 82p. But by last Friday the shares had slumped to within 7.6% of the rights-issue price, leaving it almost certain that underwriters Citigroup and UBS would be left holding a large chunk of the issue.