20-year wait for cash beckons for B&B shareholders

30/09/2008

Bradford and Bingley shareholders could wait up to 20 years to see their money back.

Roger Lawson, of the UK Shareholders Association (UKSA), explained shareholders of the nationalised bank were "irate", especially those who signed up to the lender's rights issue and there could be a long wait for any compensation.

"The government has rushed in without a thought for shareholders," he said.

There are around one million B&B shareholders who have seen the value of their investment drop over the last year and now uncertain as the government has not made it clear the terms of any compensation.

Mr Lawson explained full compensation might only come once the mortgage book is closed and if there is a profit – which could take as long as two decades.

Whether the mortgage book will close in profit or not will also be difficult for any valuer put in charge of estimating the size of compensation – and disagreements may have to go to court, as they have with Northern Rock.

He said: "The government has used the banking regulations and put together a sharp deal.

"It looks very clever but they are left with £20 million of poor quality mortgages.

"This is a very small bank with assets that are very questionable."

Mr Lawson also explained B&B was quite different from Northern Rock.

"It is very different from Northern Rock, where the problem was with cash flow not the quality of mortgages. At Bradford & Bingley it is the opposite. They had cash flow but the assets were the problem."

A shareholders action group is now to be established to represent their issues, but the high number of shareholders will make this a difficult task, Mr Lawson explained.