Bradford & Bingley has been touted as a potential bidder for Kensington Group, which confirmed it was in advanced takeover talks last week.
John Charcol senior technical director Ray Boulger says B&B has been buying books of business and this would accelerate a move into sub-prime.
He says: “B&B has been buying a lot of books of business from both Kensington and GMAC-RFC for a while. I would see the logic in B&B buying Kensington and it would mean that they then did not need to buy any more books. B&B made a brief entrance into the sub-prime market and this would help gain a bigger foothold.”
Investment bank Morgan Stanley has also been widely mooted as a potential bidder for the group, along with both Merrill Lynch and Lehman Brothers.
Kensington issued a trading statement on May 22 warning that the offer is likely to be below its present value. Its closing share price on that date was 560.5p. At the time of going to press, Kensington’s shares are at 494.5p.
In April, Kensington revealed that its mortgage book had fallen and its margins had been cut. The group, which will not comment on the speculation, is set to issue its interim report and strategic review this week.