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Bradford and Bingley placed on Amber Top by IVIS

The Institutional Voting Information Service (IVIS), operated by the ABI, has today placed an "amber top" on the amended rights issue by Bradford &Bingley and proposed sale of a 23 per cent stake to TPG. An amber top indicates that considered judgement is required by shareholders in voting on the relevant resolutions.

However, the ABI states in its report that the resolutions involve breaches of sound governance.

Peter Montagnon, Director of Investment Affairs, said:

"The proposals by Bradford &Bingley involve breaches of fundamental principles of sound governance which are unacceptable to shareholders and would normally automatically attract a red top, indicating our most serious level of concern. We have opted for an amber top after intensive consultation with our members and other relevant parties, and particular consideration of the exceptional circumstances facing the company.

"Fundamental principles breached include the right of pre-emption whereby new shares should be offered to existing shareholders in proportion to their existing holdings, and the preferential treatment afforded to TPG both in terms of protection against dilution and the opportunity to participate in future fund raising on preferential terms.

"This imposes a substantial transfer of value from existing shareholders to TPG, while the fact that the rights issue cannot proceed without simultaneous agreement to the TPG deal limits the ability of shareholders to exercise their right of judgement.

"We remain very disappointed that the board of Bradford &Bingley failed to ensure a timely flow of management information that could have prevented the need for this unsatisfactory arrangement and urge the regulatory authorities to take additional care in encouraging bank boards not to put themselves in such a position in future.

"Shareholders must now make a considered judgement. Insofar as they are willing to extend their support on this occasion, this should be on the clear understanding the breach of fundamental protections is not a precedent."

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Last updated 01/07/2016