Bradford & Bingley

LATEST NEWS

BBSAG submits their formal Appeal to Peter Clokey requesting his revision to his Nil valuation of 5 July 2010. Click here for full documentation

The B&B Shareholders Action Group had filed its appeal on behalf of all B&B dispossessed shareholders. Click here to read the 8 page letter submitted on 25 August, two days before the deadline. This has been a major exercise, which could not have been done without the very substantial financial support received from among those with whom BBSAG has been in contact using the facilities of the UK Shareholders' Association.

The Committee and its legal team are convinced that, had no appeal been made, the opportunity to obtain compensation for your B&B shares would have been lost. Unfortunately, making the appeal is only another stage in what may be a longer fight for justice, so now we have to begin preparing for a possible approach to the Upper Tribunal, in case the appeal is rejected. More information about this will be provided in September.

In the meantime, if you have not recently donated please do so now. This Action Group is run by volunteers, led by Richard Jennings, a chartered financial analyst. It uses staff employed by the UK Shareholders' Association to handle office work. Their time has to be paid for so we are trying to keep that to a minimum, because the top priority is to raise a fund, net of all costs, sufficient to pay for the legal assistance without which nothing is possible.

Please click here to make an on-line donation or alternately send a cheque made payable to 'UK Shareholders' Association' to - UK Shareholders' Association Ltd, 1 Bromley Lane, Chislehurst, Kent, BR7 6LH. Please include your name, address, email address, with this cheque.

Richard S. Jennings, Chairman, Bradford & Bingley Shareholders Action Group Committee

CLOKEY DENIES JUSTICE TO DISPOSSESSED SHAREHOLDERS

Peter Clokey, the PriceWaterhouseCooper’s valuer appointed by the government, stated on 5th July that he has determined that there shall be no recompense for dispossessed shareholders in Bradford & Bingley.

The B&B Shareholders Action Group (the BBSAG) is preparing to submit a concise appeal to Mr P Clokey of PWC by the 27 August 2010 deadline regarding his current determinations detailed in the Assessment Notice.

It is apparent that B&B shareholders now have a fight on their hands and because of this we invite you to go straight to our campaign donations page in order to make a financial contribution towards the legal fund. All the BBSAG members who are fighting for shareholder justice for all work entirely for free, but do need donations from dispossessed shareholders in order to pursue this issue because the unavoidable costs may be substantial, including the office staff working for us on this campaign.

UKSA urgently needs funds to support this campaign - to donate by cheque click: Appeal or to donate online click: Donation

Richard Jennings, spokesman for B&B Shareholders Action Group (BBSAG) a body formed under the UK Shareholders’ Association, states the following –

“Peter Clokey has delivered a damning verdict on the rights of UK shareholders. This is a very sad day not just for B&B shareholders but UK shareholders in general.

“In our opinion, his determination bears no economic resemblance to the value of the bank at the point of nationalisation. We have always, and continue to assert that the bank was both adequately capitalised and solvent when taken into government ownership – facts re-iterated by Messrs Richard Pym & Rod Kent just days prior to the nationalisation and also after the nationalisation in open statements. These statements by the Bank’s directors bear no relation to the result of Peter Clokey’s determination and it appears that Mr Clokey has completely ignored the body of evidence we produced which supports a valuation approaching a pound a share, which begs the question why did the determination take so long?

“The BBSAG is wholeheartedly committed to ensuring that justice ultimately prevails. We shall study the grounds for appeal and will make a further announcement in due course. Affected shareholders should register with www.uksa.org.uk in support of the fight ahead.”

Please go to this page of our web site: www.uksa.org.uk/AppealB&B.htm where there is an explanation of how you can support this campaign. Please donate if you can. Your contribution is very important if we are to continue to fight for compensation.

The following email was submitted to Mr Peter Clokey, the government-appointed independent valuer of Bradford & Bingley shares, following cancellation of a meeting by PriceWaterhouseCoopers acting on legal advice because of the imminence of the valuation announcement.

We write as the BBSAG with the support of UKSA. It was dismaying to not have the opportunity to speak with you in person on the 11 June 2010 with regards to numerous aspects included within our previous Official submission of 12 Feb 2010.

We would re-iterate the following points and make a final observation in point (5) below with regards to the recent moves by UKFI to increase shareholders equity through the heavily discounted redemption of the various bonds which are freely traded on the public market:-

We maintain that the recent news flow from Santander, whereby their profitability was boosted through their UK banking activities (indeed almost ‘boastful’ comments being made by management as to the attractive purchase prices they paid for B&B & A&L) points to an undervaluation of B&B’s deposit book sale by HM Treasury. We continue to assert, as per our prior submission, that the deposit book was part of B&B at the point of Nationalisation and should be included in your Valuation. You are tasked with assessing whether the sale was at fair value at this point and the weight of evidence is that it was clearly sold at a material undervaluation.

You state on your website the supposed distinction between RBS & HBOS and B&B as –

“In the case of Bradford & Bingley, the long-term solution to addressing the severe solvency problem of the bank was to use the resolution powers as set out in the Banking (Special Provisions) Act 2008. This solution did not require emergency assistance in order to be carried out. “

These ‘severe solvency problems’ have never been disclosed by any party despite our requests to the Treasury and use of the FOI procedure. As per our prior submission and indeed supportive comments re our stance by Lord Myners detailed within that submission, we assert the BoE SLS scheme should have been made available to B&B as it was deemed ‘ordinary market assistance’ and that there be no penalisation in the valuation in assuming this avenue was open to B&B.

3. B&B was both solvent and adequately capitalised at the point of Nationalisation.

Although you are tasked with valuing the bank at the point of Nationalisation, we do not think that you can ignore the £1.4bn of shareholders equity (which of course as per standard valuation and accountancy assumes for redemption of all prior charges – and at par on the bonds) which still sits in the balance sheet as disclosed by the most recent set of results. This evidences the clear fact that the assumed losses on the mortgage book are not coming to pass and that the comments made by Pym & Kent at the Treasury Select Committee Banking Crisis Hearing post the Nationalisation that B&B was both solvent & well capitalised when the Government nationalised it were correct.

4. B&B shareholders were deprived of the opportunity to benefit from a market re-appraisal of its fortunes.

We would make the point that almost 1m shareholders were not only dispossessed of their investment at what was now unarguably the nadir of the banking crisis, but that they were also deprived of being able to benefit from a re-appraisal of the banks fortunes. The most useful comparison to B&B and which is usefully publicly quoted is Paragon Group – they held a similar ‘buy to let’ mortgage book and had stopped lending as they found the capital markets closed to them. Since the point of B&B’s Nationalisation, Paragon’s share price rose almost 6 fold. This evidences the fact that the markets assessment of the value of the banks was fuelled by fear and extreme pessimism and this supports our assertion that B&B’s market price of 20p at the time of Nationalisation was not in any way reflective of the banks fundamental worth. This point is further supported by the consensus of City analysts opinions that we detailed in our previous submission.

5. Interpretation of Compensation Order given the recent bond ‘buy ins’ at discounts to par.

The Compensation Order seems to us to be open to a degree of interpretation as to the possibility of an initial payment and subsequent interim payments as the mortgage book ‘run off’ continues. Quite clearly, aside from the points made in (4) above, for shareholders to see a ‘run off’ off the mortgage book resulting in the residual shareholders equity of £1.4bn remaining intact and, quite possibly increasing now given the bond buy-ins at less than par, in the event that they are denied these monies this would be a third blow and a further abuse of their rights. Please ensure that this factor is given proper and adequate consideration.

BBSAG believe that the weight of evidence with regards to the inherent value in B&B at the point of Nationalisation is extremely compelling. Unless you have uncovered large scale fraud in the accounts, which would have implications for the auditors KPMG, the FSA and the Directors, any Valuation materially below book value is unjustifiable. We look forward to a restoration of shareholders’ economic rights.

Go to the following page for more explanation of the above issues and a summary of the views of UKSA on the nationalisation and what issues shareholders might pursue: B&B Summary. Please read it if this is your first visit to this web page.

The following is what we have previously said about the company (latest comments at the bottom):

In April 2008, Bradford & Bingley Plc issued an announcement that stated they were not intending to have a rights issue following rumours being published in the press. But only a few weeks later they announced one. In addition, after the terms of the rights issued were published, they decided to revise the issue so that it was at a deeper discount and included the sale of a substantial proportion of the company to TPG.

On the 4th June, UKSA wrote this letter to the FSA calling for an investigation into the affairs of the company:FSA_Letter_B&B

Note that UKSA did not believe the revised terms of the rights issue were beneficial to private shareholders as claimed and suggested that shareholders might consider voting against it. The Association of British Insurers (ABI) expressed concerns about the sale of a large stake in the company to TPG as part of the new deal. Peter Montagnon, director of investment affairs at the ABI, said: “On the surface this is a pretty serious breach of the pre-emption rights principle." Pre-emption rules basically give existing shareholders a first call on any new share issues.

On the 5th June the media reported that the FSA was investigating potential insider trading in the shares of Bradford & Bingley prior to the profits warning due to the abnormal price movements in the few days beforehand.

UKSA issued the following press release on the 16th June concerning the question of whether shareholders should vote in favour of the rights issue: Press063 and taking into account subsequent events, we issued the following note on the 30th June: Press064 .

Soon after that press release was issued, TPG withdrew from the deal claiming downgrades to the credit rating of B&B as the reason, and within a matter of hours a third rights issue was proposed. We then issued the following press release supporting this proposal: Press066 .

UKSA issued the following press release on the 28th September following press reports of the imminent "nationalisation" of Bradford & Bingley: Press068. On the following morning the Government announced that the company had been nationalised under the same Act used to nationalise Northern Rock and the retail deposit base and branch network had been sold to Santander (Abbey) funded by about £20bn from the Government and the Financial Services Compensation Scheme (FSCS). The latter will get a loan from the Government which will be repaid out of the other assets of the company. The B&B mortgage book and other assets will be retained by the Government and effectively wound up. Any compensation payable to shareholders will be determined by a "Compensation Order" to be put in place in due course.

The following note was issued on the 5th October and contains a summary of the views of UKSA on the nationalisation and what issues shareholders might pursue: Update_1 . This note was issued on the 15th October to advise supporters of the status of this campaign: Update_2 . The following note was issued on the 30th October concerning a letter that some shareholders have received from a firm of solicitors and other news: Update_3

On the 10th November we sent the following letter to the Chancellor of the Exchequer with the purpose of trying to get some answers to the key questions on the nationalisation of Bradford & Bingley and commenting on the possible compensation arrangements for shareholders: Darling_Letter_Nov2008. This note was issued soon after covering that and the recent House of Commons Treasury Committee meeting: Update_4.

The formal launch of the Bradford & Bingley Shareholder Action Group was announced in this press release on the 17th November: Press072 . Soon after we also issued this press release on the Subordinated Bonds (formerly called PIBS): Press073 . On the 22nd November we issued this note which covers the events prior to nationalisation and other revelations from the Treasury Committee: Update_5

We are suggesting that supporters write to their M.P.s using the following letter as a template: B&B_MPs_Letter so that we can get some answers on the key questions for shareholders. This and other news was covered in this note: Update_6

On the 11th December the Compensation Order for Bradford & Bingley shareholders was published by the Government - see www.opsi.gov.uk/si/si2008/draft/ukdsi_9780111471180_en_1 . Unlike that for Northern Rock, no artificial assumptions are placed on the valuation process and terms of reference. More comments on this are given in this note: Update_7.

On the 27th December, UKSA called for a public inquiry into the affairs of Bradford & Bingley, and repeated its request for information on why the company was nationalised, in this letter to the Chancellor of the Exchequer: Darling_Letter_Dec2008 . On the 31st December we issued this note about the debate on the Compensation Order and other recent news: Update_8

A note on the valuation of Bradford & Bingley was published on the 26th January 2009 in this file: B&B_Valuation. It makes it clear that in our view the company had significant value at the nationalisation date, and gives some rough guidance as to what that might be. This was distributed to our supporters together with other news in this note: Update_9

MEETING FOR SHAREHOLDERS. A meeting to answer the questions of shareholders was fixed for the 7th March in Bingley, Yorkshire. Details of this meeting and other news is in this note: Update_10 . On the 3rd March we issued this press release Press_Mar2009, and this note to shareholders: Update_11. A report on the Public Meeting for shareholders and other news was issued in this note: Update_12.

The page of this web site dedicated to the Subordinated Bondholders (PIBs) was revised on 29/3/2009 and a letter template for use when writing to your MP was added - see Bonds . A note on the current objectives for this campaign, and the B&B accounts for 2008 was issued in this document on the 14th April: Update_13

BOND DEFAULT. On the 28th May we issued this note on the cessation of interest payments on the subordinated bonds (PIBS): Update_14

LETTER TO PRIME MINISTER. On the 9th June, we sent this "open" letter to Prime Minister Gordon Brown: Brown_Letter_June2009

VALUER APPPOINTED AND SHAREHOLDER MEETING. We issued this note after the announcement of the appointment of an independent valuer for the determination of compensation payable to shareholders: Update_15. It also announced a meeting for shareholders on the 10th October in London.

EARLY DAY MOTION. A press release was issued concerning the submission of an Early Day Motion in the House of Commons by John Thurso MP: Press_Jul2009 at the end of July. This and other news was covered in: Update_16

MEETING ON THE 10TH OCTOBER. This note was issued on the 8th September about the forthcoming meeting for shareholders on the 10th October: Update_17 (see this page also for meeting details: BB_Meeting). A final note to remind people of the meeting and giving more details was issued in this document: Update_18

MEETING REPORT. A brief report on the meeting for shareholders held in London, plus some photographs, is present on this web page: BB_Meeting. This was also included in this newsletter to supporters: Update_19

ACTION GROUP COMMITTEE TO MAKE SUBMISSION TO PWC IN RESPECT OF THE VALUATION PROGRESS. This follows several meetings between David Blundell, Chairman of the action group, and Peter Clokey of PWC. The following newsletter : Update_20 was added to the site in January 2010.

Bradford and Bingley Investor Action Group makes submission to Peter Clokey, the independent valuer appointed by the Treasury. February 2010. A copy of the submission can be found here and the press release here. The submission claims that the "nationalisation was unnecessary and destroyed a well capitalised and solvent bank".

PRESS RELEASE - Dispossessed Bradford & Bingley shareholders look for justice in June. May 2010. Can be found here

Bradford and Bingley Campaign Financial Report to 31st May 2010 can be found here

Response to Subordinated Bonds Redemption Offer. Update 24 can be found here

Template letter for B&B shareholders to send to Peter Clokey by 27th August. If you are unsure how to respond to Peter Clokey, a template letter can be found here

PRESS RELEASE - Bradford & Bingley Shareholder Action Group protests at refusal to extend appeal deadline. "Peter Clokey heaps further injustice upon dispossessed B&B shareholders". July 2010. Can be found here