11:50am Thursday 8th January 2009
By Chris Holland
Legal moves have been launched to win compensation on behalf of 1,200 Bradford & Bingley shareholders who invested in the business when it was seeking to raise an extra £400 million through a rights issue.
The action is being taken by London solicitor Leon Kaye on behalf of 1,200 members of the Bradford & Bingley Rights Issue Action Group – a separate body to the Bradford & Bingley Shareholders’ Action Group.
B&B’s directors had problems with the rights issue which went through several revisions before being approved at a meeting of shareholders in Sheffield in August.
Following the meeting, the then chairman Rod Kent said the funding would make it one of the best capitalised banks on the high street.
Around six weeks later the Government stepped in to rescue the bank which had seen its shares decimated in the stock market turmoil affecting the financial sector.
It nationalised B&B’s mortgage business and sold the savings arm to Santander Abbey for £613 million.
Mr Kaye said he had counsel’s written opinion that those who took up the rights issue and believe they were misled by the company have a strong case.
He has prepared a detailed claim letter which will be served individually on those who were directors of B&B at the time of the rights issue, as well as the company itself, effectively the Government.
The action is aimed at winning full compensation for those who supported the rights issue which Mr Kaye said would total £1 million.
The group is co-operating with lobbying organisation the UK Shareholders Action Group, which includes the B&B Shareholders Action Group, chaired by Leeds businessman David Blundell.
The B&BSAG is open to all B&B shareholders, including those who did not participate in the rights issue.
Mr Blundell welcomed the legal steps being taken by Mr Kaye.
He said: “I was one of those who took up the rights issue in the belief that Bradford & Bingley would eventually see its way through its troubles on the back of assurances by the senior management and the board.”
Mr Blundell said the group is planning a meeting in Bingley in March to raise the profile of the campaign.
An invitation has been issued for a minister to attend and Shipley MP, Philip Davies hopes to be present.
The Financial Services Authority has announced a consultation on moves to ensure savers who lose money when a bank fails receive compensation within a week.
Anyone wanting to join the group can visit uksa@uksa.org.uk. Shareholders can get in touch with the rights issue action group on leonkaye.co.uk/bradfordbingley.html.
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