B&B sounds caution on mortgages

London(online-unsecured-loan.co.uk) Jun 4, 2008: In the mortgage lending sector, things took a bleaker turn when the prominent British lender B&B continued to suffer losses for the first four months of this year. Due to this the pressure on the margins continued high because the funding costs remained at the high end. All these things result in the increase in the risks of defaults by the customers.

After losing over 66 percent of their market value during the last year, B&B'S shares continued with their downward slump, reaching a record low of just 60 pence after slumping down by 32 percent during the recent times. Its bad financial affects spread across banking shares in several countries of the continent. The dealers are apprehensive that 'cut price rights issues' could be severally hit against the back-drop of failing belief of the investors.

"We think the consequences of having an underwater rights issue are not in the best interests of shareholders," B&B's executive chairman, Rod Kent, clarified before the analysts, adding, "You would have had a troubled market after the rights issue closed, with an overhang left with the underwriters."

Other big market players like the Royal Bank of Scotland, HBOS and the likes, also seem keen for planning lucrative rights issues. In fact some important lenders have come out with statements to announce they intend to continue trading in accordance with their former guidelines.

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