Resolution plans bank consolidation

By Steve Slater and Elena Moya

LONDON (Reuters) - Restructuring specialist Resolution plans to consolidate some of Britain's smaller banks and has been invited by investors in Bradford & Bingley BB.L to consider using it to spearhead the plan, Resolution said on Monday.

B&B rejected the investment approach from Resolution, saying it would have meant Resolution taking effective control of the lender.

Under the consolidation plan, Resolution said it would bring together banks and other lenders hit by the credit market turmoil to create "a new, larger and stronger bank."

Its plan involves a capital investment of 2 billion pounds in the sector over the next two years. It would likely draw in banks, building societies and other specialist lenders.

Resolution said Standard Life and other top Bradford & Bingley investors had approached it to consider including Britain's biggest buy-to-let lender in its plan. If suitable, Resolution said it would put forward "a proposal that would be led and funded by investors in Bradford & Bingley."

It added: "Such a proposal would result in a capital injection by existing Bradford & Bingley investors of some 400 million pounds to replace the TPG capital raise and restructured rights issue."

U.S. private equity firm TPG Capital LP TPG.UL agreed to buy a 23 percent stake in B&B earlier this month for about 179 million pounds.

The TPG investment followed a profit warning from the lender, which forced it to slash the price of an emergency rights issue and seek help from an outside investor. B&B plans to raise a further 258 million pounds through a rights issue.