TROUBLED BRITISH lender Bradford Bingley (BB) is hoping its £400 million (€504 million) rights issue, which closes this morning, will attract greater shareholder support than the disastrous capital raising of rival HBOS, though a large chunk of shares is still expected to end up in the hands of underwriters.

BB's rights issue has proved controversial.

The buy-to-let lender has been forced to restructure it twice - the first time following a shock profit warning in June and the second after private equity group TPG pulled its support in July.

Following TPG's exit, BB's largest institutional investors stepped in to help rescue the rights issue. BB shareholders have until 11am today to take up their new shares, although the bank will not know the outcome until the weekend. Shares in BB have been hovering about the 55p rights issue price for several weeks, though last night they closed at 54¾p, down ¼p.

This is in contrast to the HBOS rights issue, where shares traded below its 275p rights issue price for some weeks before the capital raising closed. Only 8 per cent of HBOS's new shares were taken up by investors. Some analysts predict the take-up of BB's right issue could be less than 20 per cent given that a large chunk of BB's retail shareholder base is not expected to take up the rights.

That will leave a rump of unsold stock as retail investors account for almost 40 per cent of the shareholder register.

UBS and Citigroup are underwriting BB's issue, which will raise £455 million in total, including £55 million of fees. However, sub-underwriting brings their combined net exposure down to about £100 million. - (Financial Times service)