Monday, Bradford & Bingley Plc (BB.L), a provider of specialist residential mortgages, said it appointed Richard Pym as Chief Executive with immediate effect to steady the ship amid plummeting UK housing market. The development came as only 28% of the investors subscribed to the company's rights issue.
The job of Pym's seems to be challenging, as investors would be hoping that his appointment might signal the end of a turbulent period for the country's leading buy-to-let lender. Pym will now have to stabilize the bank, which has already been dampened by the under-subscribed rights issue and weakening housing market. He will be taking the helm at a time when the speculations are rife that the company would be left with few choices and ultimately be taken over.
Richard Pym is currently an independent non-executive director of Old Mutual plc, the international asset management group, and non-executive Chairman of BrightHouse Group Ltd, an investment of private equity firm Vision Capital. Pym also was the Chief Executive of Alliance & Leicester plc (AL.L) and was responsible for fundamental changes in Alliance & Leicester's product and channel strategies, including the substantial development of Internet capabilities.
The struggling bank said Pym would succeed Steven Crawshaw, who stepped down in June 2008 due to ill- health, and the non-executive Chairman, Rod Kent, became temporarily Executive Chairman.
Richard Pym's service contract will have 12 months notice on either side, with a minimum period of two years. His basic salary will be £750,000 p.a. In addition, for the balance of 2008 and the first six months of 2009, he will be guaranteed a minimum cash award of 50% of salary for each of these periods, plus deferred shares equal to the value of the cash award. Pym will also receive an initial one-off grant of share options at the current price to 2 times his basic salary.
Bradford & Bingley, or B&B, in a separate press release, announced that only 28% of its shareholders have subscribed to its £400 million rights issue, which was announced last month as a measure to enhance capital after U.S. investment group TPG Capital walked away from its deal to buy a stake in the company. This is the third attempt by B&B to raise funds to bolster capital ratios depleted by the credit crunch.
As of 15 August 2008, investors subscribed to about 230.41 million shares. That leaves underwriters of the rights issue - Citigroup Inc. (C) and UBS AG (UBS) - to find subscribers for the remaining 597.26 million shares until 4:30 p.m. on 22 August 2008.
Meanwhile, the bank said in its statement that there has been "no material change" in its current trading and outlook since its last statement made on June 2. The company will release its half-year results on 29 August 2008.
Bradford & Bingley is a provider of specialist residential mortgages all secured on property and a wide range of savings products through a network of 337 branches. The company depends on the wholesale funding markets for majority of its needs and concerning are investors are concerned about the company's heavy exposure to the buy-to-let market amid the plummeting housing market has also worried investors. As its balance sheet beefed up by the rights issue and leadership concerns addressed, B&B is expected to step up efforts to find a bidder.
On London exchange, Bradford & Bingley stock is trading at 54.75 pence.
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