By Clara Ferreira-Marques
LONDON (Reuters UK) - Bankers for Bradford & Bingley (BB) have been left with over 70 percent of its 400 million pound rights issue, the lender said, as it hired the former head of rival Alliance & Leicester to draw a line under its troubles.
The mortgage bank, which has seen a torrid three months since it first surprised the market with news of an emergency rights issue, named City veteran Richard Pym as chief executive.
Pym replaces Steven Crawshaw, who quit in June for health reasons as B&B struggled to push through the funding boost.
The former chief executive of A&L (ALLL) has already taken the helm but is not expected to outline his strategy before October, though he told Reuters he would review a deal to buy loans from finance company GMAC that has driven arrears higher.
"I don't think there is a banking chief executive in the world who doesn't have some issues to address at the moment, and I haven't seen anything to date that ... we can't resolve," he said in a telephone interview.
"Obviously, there are some specialist loans which have got high arrears at the moment, but the core lending book, the prime buy-to-let book, is very solid."
The embattled bank, forced to turn to investors for cash in the face of a fast-deteriorating UK economy, said on Monday investors took up only 27.8 percent of its fundraising.
Underwriters Citi and UBS now have until Friday to place the remainder of the cut-price, twice-restructured offering.
The take-up for the rights issue -- the latest of several such cash injections by banks hit by the credit crunch -- is well below historical levels but was as analysts had expected and above the 8 percent seen at rival HBOS.
B&B traded close to the rights price of 55p in the run-up to the call, and just above as subscriptions closed on Friday.
HOPES OF STABILITY
Most of B&B's retail shareholders, who made up 40 percent of the investor base before the issue, are not expected to have participated, but four top shareholders -- Standard Life, Legal & General, M&G and Insight -- are understood to have taken up their roughly 13 percent share.
They had been expected to take up as much as 145 million pounds of shares to back the underwriters, in a deal also supported by six of Britain's largest lenders -- spreading the cost of propping up B&B over 12 major institutions.
"We're all very big players. It's not a big concern to us," one source familiar with the matter said on Monday. "We have five days to place the rump."
The six retail banks have agreed to take up to half the rights issue, or as much as 3 percent each of B&B. That number should come down, however, after take-up was stronger than expected at the time of the deal, and with shares currently trading close to 55p, well above recent lows.
If they took up their maximum, HSBC (HSBA), Lloyds TSB (LLOY), HBOS (HBOS), Barclays (BARC), Santander's (SAN) Abbey and Royal Bank of Scotland (RBS) would be left with just under 20 percent of B&B's enlarged share base.
B&B has seen a turbulent few months, with its shares losing over three quarters of their value since January. But the bank and its investors hope Pym will spark a turnaround.
Pym is expected to focus on costs and on managing B&B's riskier specialist loans, untested in a downturn, though limited refinancing options for clients could limit room for manoeuvre.
Pym, who was chairman of retailer Halfords (HFD) until he was appointed to B&B, was part of U.S. buyout firm JC Flowers' bid team for mortgage bank Northern Rock.
A&L, where he worked for 15 years as finance director, head of retail banking and later chief executive, was sold to Spain's Santander last month, but analysts said B&B's limited branch network and tough market segment made it an unlikely prey.
Pym, set to earn 2.25 million pounds in his first 12 months, said current market conditions were likely to have put most banks off considering acquisitions.
(Additional reporting by Douwe Miedema and Daisy Ku, editing by Will Waterman)
