B&B underwriters agree to hold stock

The underwriters of the Bradford & Bingley (B&B) rights issue have entered into a 'lock-up' agreement – agreeing not to sell the reaming shares for 20 days.

Investment banks Citi and UBS agreed to underwrite the rights issue, but were left holding 71.16 per cent of the shares following a muted uptake of the £400 million offer.

It is thought this equated to a 20 per cent stake in the organisation.

However, with shares in B&B trading below the sale price of 55 pence for much of the last week, the underwriters have struggled to sell the remaining stock.

Citi and UBS had until 16:30 BST today to sell the shares – a deadline that has now been delayed.

The underwriters have agreed "not to do certain other related activities, for a period of 20 calendar days from and including 22 August 2008".

This is because Citi and UBS have informed B&B they "…are of the opinion it is unlikely any subscribers can be procured at a price per new share which is at least equal to the issue price of 55 pence".

Under a rescue plan orchestrated by the Financial Services Authority (FSA) last month, Citigroup and UBS - alongside six high street banks, HSBC, Lloyds TSB , HBOS, Barclays, Abbey and Royal Bank of Scotland (RBS) - rallied round to sub-underwrite the capital-raising.

The offer was first announced in May but was delayed twice, once following an offer for the company from the Texas Pacific Group (TGP).

The decision comes after Richard Pym, former chief executive of Alliance & Leicester, took over as the chief executive of Bradford & Bingley.

Shares in Bradford & Bingley were trading at 52 pence this morning at 10:10 BST following the announcement, up 0.97 per cent.