Big shareholders in British lender Bradford & Bingley are stepping in to salvage its £400m funding plan after a US private equity firm walked away from the deal.
Texas Pacific Group, which was due to buy 23% of the company as part of a wider funding package, announced last night it was withdrawing its £179m cash injection. This came after B&B's investment status was downgraded by a ratings agency.
But B&B said a group of its largest shareholders including M&G Investment Managers, Legal & General Investment Management, Insight Investment and Standard Life Investments were now backing the deal.
The bank, which has been badly hit by the credit crunch, is raising the money to help shore up its finances.
TPG's cash had been lined up alongside a deeply discounted rights issue - a call on existing shareholders for cash - which would have raised another £258m.
B&B said it was proceeding with its capital plans through a bigger rights issue, which would raise £400m after fees. This is being underwritten by banks Citi and UBS.
The lender said TPG's withdrawal came after ratings agency Moody's downgraded its unsecured and long-term debt ratings, which effectively tells the market that the firm is a greater investment risk.
