Banking industry

Bradford & Bingley's Lacklustre Stock Market Debut

Strategic Insights

Dec 8, 2000 — 1 min read

The former building society made its stock market debut on Monday, offering nearly 2.7 million of its members a chance to sell their shares by auction. Despite expectations of a stronger performance, the shares traded at the low end of the range, giving many members a windfall of just over £600. The lukewarm reception for Bradford & Bingley was attributed to its relatively unexciting business model as a mortgage bank, which failed to generate significant demand from tracker funds.

Key Takeaways:

The shares of Bradford & Bingley opened at 254p and ended the day at 244p, valuing the company at £1.66 billion.
Nearly 40% of B&B's members sold their shares by auction ahead of the flotation, more than twice the number seen in similar deals.
City analysts attributed the lacklustre performance to the company's failure to meet the expectations of tracker funds, due to its relatively unexciting mortgage business.
Abbey National, which made its own flotation in 1997, has seen its shares soar in recent weeks, with speculations surrounding a possible takeover by Lloyds TSB.
Bank shares in general have had a rollercoaster ride this year, with many former building societies seeing their share prices drop significantly before making a recovery.
Shares in Abbey National have risen nearly 4% in the past week, driven by takeover speculation and strong trading performance.

Statistics:

2.7 million: The number of Bradford & Bingley members who participated in the share auction.
£620: The windfall received by members who sold their shares at the auction price of 247.86p per share.
£1.66 billion: The value of Bradford & Bingley's shares at the end of its first trading day.
40-27%: The number of Bradford & Bingley members who chose to sell their shares by auction, compared to 23-27% in similar deals.
254p-244p: The price range of Bradford & Bingley's shares on its first trading day.

Sources:

The Times, 2000
" Bradford & Bingley makes stock market debut", article from The Times, 2000
"Abbey National shares soar as takeover speculation builds", article from The Times, 2000

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