Bradford & Bingley shareholders want answers on funding

12 July 2010

The news last week that the Treasury will not have to pay compensation to former shareholders of now defunct buy-to-let lender Bradford & Bingley has caused some interesting comment.

It prompted some contributors on Mortgage Strategy Online to quote the standard disclaimer for investing in shares - that you should remember that the value of your investment can go down as well as up. In short, they are saying that B&B shareholders should accept their loss and take it on the chin.

Well, the share value did indeed go down and it does seem probable that the company will sooner or later be unable to meet its commitments. I’m prepared to accept my loss on that account.

But as a former B&B shareholder there is one point I would like to see addressed. There was a rights issue only a month before the firm went under which shareholders were led to believe would provide the necessary cash for B&B to continue being funded into the next year.

If this was not true it seems to me that something akin to fraud has been committed. On the other hand, if B&B was indeed funded we are being cheated.

I’m sure readers will understand that some shareholders believe they deserve at least an explanation and an apology from directors who asked for more money only a month before the government moved in to close the company down.

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