WITH the banking sector still deep in crisis the last thing it needed was another Northern Rock-style embarrassment. The catalogue of errors at Bradford & Bingley has shown that it is quite capable of making a regular fool of itself.
The withdrawal of US private equity firm Texas Pacific Group from a fundraising exercise left B&B and its advisers Goldman Sachs and the law firm Herbert Smith with more than just egg on their faces.
They had argued in favour of the "certainty" th
at TPG offered against the riskier support offered by Clive Cowdery's Resolution group, but inserted a get-out clause that appeared to undermine what they sold to shareholders as a watertight agreement.
B&B had agreed to let TPG walk away if its credit rating slipped, which is exactly what happened last week. With shareholders due to vote on the deal, the bank was forced to turn to its existing shareholders – Insight, Legal & General, Prudential and Standard Life – to support an enlarged rights issue. It is the third time B&B's fundraising has been changed.
Pressure is now mounting on chairman Rod Kent who has overseen this shambles, turning B&B into the Bradford & Bungle and causing more distress for investors.
TPG is far from being off the hook. It may have been within its rights to pull out, but its opportunism and lack of loyalty have damaged its own reputation in the City.
With the British banking system in such a fragile condition, the Financial Services Authority, which helped broker the latest patch-up, will take a dim view of any future moves by TPG into the UK, a grudge that may extend to others in the private equity industry.
Thus a victim of its own successTHE increased offer for Scottish telecoms firm Thus came in at 180p – exactly as this column forecast a month ago – and the offer document, due out this week, is likely to mark the end of the firm's independence.
Chief executive Bill Allan has worked tirelessly to build a company in a difficult and cash-hungry market and one regret he may have is that his and the firm's efforts to create one of the sector's better performers was never fully appreciated either in the City or on home territory.
Allan once talked of Scotland becoming as proud of Thus as it was of Royal Bank of Scotland, though that was before the banking crisis. But we knew what he meant.
At least the bid from Cable & Wireless will allow investors to see what has been going at Thus since it was spun out of ScottishPower in 1999 and briefly took its place in the FTSE-100. In recent times it has been generating cash, and in May announced a maiden operating profit.
No wonder C&W has coveted its smaller rival to whom it has been losing market share.
Let doomed Ardana serve as warningTHE collapse into administration of bioscience firm Ardana was a lesson to all who believe this sector to be the great prospect for the Scottish economy.
Ardana was meant to be a flagship for the healthcare industry.
But unless somebody picks up the pieces, it will disappear without really being missed by the wider public, most of whom will not have even heard of it.
By contrast, Borders-based ProStrakan has developed a business model that ticks all the right boxes, and expects to hear more good news from the US regulators this week.
US backing for its anti-nausea patch will pump another £50m a year into the firm's coffers and set it on its way to becoming an established part of the Scottish corporate scene.
Ardana's problems will send a shiver through those in the public agencies who are often expected to support risky new-starts or bail out those in trouble.
As this newspaper revealed last week, Scottish Enterprise has seen what can happen when the risks outweigh the benefits.
Jack Perry, the Scottish Enterprise chief executive, contributed £25m towards a £35m package of state support to a company in Stirling that has been making redundancies. He now admits it won't fulfil expectations.
Perry argues that the agency works at the margins where private sector investors tend not to go. That's probably because private sector investors know when it is best to stay away.
The full article contains 735 words and appears in Scotland On Sunday newspaper.
