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TPG still in driving seat at B&B

The beleaguered UK lender Bradford & Bingley has turned down an approach from investment firm Resolution. TPG's stake building remains the preferred complement to the mortgage group's rights issue.

Buyout firm Texas Pacific Group's plan to take a 23 percent stake in Bradford & Bingley, the troubled UK mortgage lender, alongside a £258 million rights issue, remains the preferred option after the board turned down investment group Resolution's £400 million capital injection.

Resolution's approach was part of a £2 billion move by Resolution to buy smaller banks and merge them with B&B.

The company said it “carefully considered” the Resolution approach but could not recommend the proposal to shareholders in its current form.

B&B is due to publish a prospectus on its cash call this week, ahead of a shareholder meeting on 7 July.

A number of B&B's institutional investors including Standard Life, Legal & General, Prudential and Insight are involved in the Resolution plans.

Resolution said its proposals could see it take a stake of more than 30 percent in B&B, without looking to take over the bank. The plans would be led and funded by B&B investors, with Resolution using its expertise in consolidation to enlarge and strengthen B&B.

Resolution said it will work with B&B, regulators, rating agencies, and the bank's investors over the next two weeks with a view to tabling a formal proposal by July 4.