Bankers forced to buy unsold shares in B&B

By Clara Ferreira-Marques

LONDON (Reuters) - Banks and institutional investors supporting a cash call by Bradford & Bingley will buy the 72 percent of shares not placed in the lender's rights issue, after an ailing stock price made it impossible to find other buyers.

The move, disclosed on Friday, will leave six of Britain's largest banks with around 20 percent of their embattled smaller rival, following a deal struck last month when a credit rating downgrade forced B&B BB.L to restructure its emergency 400 million pound cash call for the second time.

Investment banks Citi and UBS were left with the bulk of the mortgage lender's emergency rights issue when it closed last Friday with shares hovering just above a discounted 55p price.

Just under 28 percent was sold to shareholders.

They had until this Friday's close to place the rump of the stock, but shares in the country's largest buy-to-let mortgage lender have remained well below 55p.

Sources close to the matter had said on Thursday that Citi and UBS would likely have to turn to sub-underwriters -- including six retail banks and four institutional investors -- to spread the cost of supporting the mortgage lender.

B&B confirmed on Friday that UBS and Citi said no buyers were likely to emerge as shares remained below the rights issue level, and would instead be subscribing, along with the sub-underwriters, to the unsold 597 million shares at 55p each.

That is above Friday's closing price of 53p, implying a modest total paper loss of just under 9 million pounds for the underwriters and others supporting the share issue.