Bradford and Bingley - I cannot keep up with it. Downgrades, rights issues, and private equity groups – the bank is a model of instability. Each week, the B&B management produce an new capital raising strategy. Somehow, every attempt fails, leaving the hapless shareholders filling an ever-growing hole.
The B&B must be giving the FSA nightmares. Although the bank reports that it has sufficient funding, the search for cash looks a lot like desperation. Besides, the whole world knows that the Bank’s core business – buy-to-let – is finished. The bank looks vulnerable to an exploding arrears rate, especially if the economy slows. Although the FSA have its supervisors crawling out of every crevice in the bank, at this stage, there is little the FSA can do other than watch the mess unfold and prepare a NRK–like bailout.
It would have been so much better if the FSA had acted three or four years ago. It could have told the B&B to calm down and take it easy over buy-to-let. Instead, the FSA was pushing the merits of its “light touch” supervision. Today, there is nothing soft about the FSA’s supervision of the B&B. The tender supervisory caress of yesterday has turned into a sledgehammer today. However, the sledgehammer arrived far too late.