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gruffydd

Bradford And Bingley Tells Investors To Naff Off

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http://ftalphaville.ft.com/blog/2009/05/27...elinquent-bank/

...There’s no explanation as to why B&B won’t be paying the coupon. Remember this is now a state-owned entity, so presumably no one feels the need to keep the market properly informed.

And the market reaction? Apoplectic. The 11.625 per cent Perps, for example, collapsed from 30 to 10 on Wednesday, with the bid/offer spread standing a 5/15.

This buy-to-let basket case has a loan book running to £42bn which it is struggling to run down. For some reason other banks don’t want its customers.

Edited by gruffydd

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No, not shareholders, they already lost the lot. The people getting the shaft here are holders of various types of bond further up the capital structure than shareholders were. This is quite interesting news as it means that the B&B mortgage book must be decaying quite rapidly -looks like buy toilet loans weren't safer than ones for owner occupiers after all.

Edited by tbatst2000

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This seems like big news. I'm surprised it's taken this long for bond holders to be hit. All the bank bailouts have been protecting them - up to now.

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We should clarify though - these are not bonds that were available on the High Street, are they?

No, definitely not, These were sold to professional investors (pension funds, unit trusts etc) not retail. Retail investors will be affected, but only indirectly.

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And the market reaction? Apoplectic. The 11.625 per cent Perps, for example, collapsed from 30 to 10 on Wednesday, with the bid/offer spread standing a 5/15.

A 30 level already discounts a strong expectation of default.

Wonder whether this'll rub off onto other non-cum prefs and pibs?

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Been on the cards for ages, which is why these particular types of instruments (particularly from B&B) were yielding 30%-50% and had already fallen massively in market price, just the final lunge downwards and the acceptance of reality.

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Excuse my ignorance, but can B&B go out of business, er, again?

Shouldn`t have been in business in the first place.

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No, not shareholders, they already lost the lot. The people getting the shaft here are holders of various types of bond further up the capital structure than shareholders were. This is quite interesting news as it means that the B&B mortgage book must be decaying quite rapidly -looks like buy toilet loans weren't safer than ones for owner occupiers after all.

Someone mention my name free-rolleye-smileys-323.gif

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Shouldn`t have been in business in the first place.

Yes it should - as a building society.

Just not in the past decade or so of ponzi management :P

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No, not shareholders, they already lost the lot. The people getting the shaft here are holders of various types of bond further up the capital structure than shareholders were. This is quite interesting news as it means that the B&B mortgage book must be decaying quite rapidly -looks like buy toilet loans weren't safer than ones for owner occupiers after all.

Are the value of ordinary shares being valued somewhere. Might we get something back yet?

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Yes it should - as a building society.

Just not in the past decade or so of ponzi management :P

That`s what I meant, but couldn`t be bothered to type it. Maybe I should have done, then I wouldn`t be typing this explanation. See, not doing the job properly in the first place leads to more problems in the future, a bit like B&B really.

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That`s what I meant, but couldn`t be bothered to type it. Maybe I should have done, then I wouldn`t be typing this explanation. See, not doing the job properly in the first place leads to more problems in the future, a bit like B&B really.

dont worry guys, a bit of red paint and some new letterheads will sort it all out.

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Some background here if anyone is interested:

http://www.telegraph.co.uk/finance/persona...ng-society.html

... PIBs are fixed-income bonds issued by building societies to raise money; several societies have gone down this route, one of the most recent being Nationwide with a £500m PIB issue last autumn. Others issuers include Britannia, Chelsea, Coventry and West Bromwich building societies. PIBs pay income twice a year and are traded through brokers, like shares. If the issuing society converts to a bank, as was the case with Northern Rock and Halifax, for example, they are rechristened PSBs (perpetual subordinated bonds) or PSNs (perpetual subordinated notes).

The risk profile of PIBs has changed drastically in light of the crisis. One reader, who bought £18,000 worth of Bradford & Bingley PIBs in 1998, faces the prospect of losing the lot as a result of the former society's collapse. Here lies the problem with PIBs: they are only as secure as the issuing building society and, broadly speaking, the yield reflects this. The greater the perceived chance of failure, the higher the yield.

How secure building societies are is coming under increasing scrutiny. Along with B&B, the Dunfermline Building Society has run into trouble. PIB holders of former societies Halifax and Northern Rock have so far been rescued by Lloyds and the Government respectively. But with Moody's, the ratings agency, downgrading no fewer than nine societies and the West Bromwich reportedly looking for a white knight (a report it denies), confidence in the sector's strength is waning. Criticism from the Financial Services Authority last week that society boards set "overambitious growth targets" and had a "risk appetite too high or not adequately imposed" makes for uneasy reading.

PIB holders do not have the cushion of the Financial Services Compensation Scheme should the issuer go bust and, in such an event, holders rank below all other creditors. Liquidity is also a problem – in other words it can be extremely difficult to sell your PIBs on the market.

Fortunately, holders of PIBs with Northern Rock and Halifax seem safe – and Dunfermline never issued any. But around 1,600 Bradford & Bingley PIB holders are not so lucky. They have been warned that they may not get their money back when the former society is eventually wound up. When the assets (what's left of them) are distributed, PIB holders are down the pecking order behind the Government and secured bondholders. So far they have continued to receive interest payments, but whether they will at the next due date in July is another matter...

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Are the value of ordinary shares being valued somewhere. Might we get something back yet?

The government are supposed to be appointing someone to value the company at the point it was nationalised so as to be able to pay some compensation to shareholders.

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Funny how just about everyone involved with B&B loses out- with the exception of the people who crashed it.

It's like an airplane crash where the pilots bale out before impact using the (golden?] parachutes- gotta love those banksters. :P

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No, not shareholders, they already lost the lot. The people getting the shaft here are holders of various types of bond further up the capital structure than shareholders were. This is quite interesting news as it means that the B&B mortgage book must be decaying quite rapidly -looks like buy toilet loans weren't safer than ones for owner occupiers after all.

i have not reviewed the Nationwide results where bad debt provision went to the moon.

Could be BTL meltdiwn

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Funny how just about everyone involved with B&B loses out- with the exception of the people who crashed it.

It's like an airplane crash where the pilots bale out before impact using the (golden?] parachutes- gotta love those banksters. :P

Remember the 'RULES'

illuminati are out to DESTROY MIDDLE CLASSES - except for a few of their goons/minions!

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I hope Santander honour Abbey's commitment to me and many others with their free business banking for life pledge.

"Santa nder"

SATAN REND - you can now see why they are RE- BRANDING!

Get their 'witty' joke?

If you don't know what 'Branding' refers to try Blacksmith + Hot fires/pokers!

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