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Resolution’s B&B bid aims to lead to £2bn lenders’ consolidation

Resolution chief executive Clive Cowdery has made a £400m bid for Bradford & Bingley as part of a plan to consolidate several smaller lenders.

Resolution plans a £2bn consolidation drive to roll together several small banks and mortgage lenders into one firm over two years. Cowdery, who retained the Resolution brand after selling his closed life business to Pearl Group in May for £4.89bn, has identified 15 other takeover targets.

B&B is not recommending Resolution’s bid and continues to back the rights issue and investment by Texas Pacific Group. B&B’s share price rallied by 15 per cent on Tuesday.

A Resolution spokesman says: “This is the start of a process. B&B said it would not accept the proposal under its current terms so it is not an outright no. It is saying, let us engage and come back with something that works.”

The offer is backed by Standard Life, Legal & General, Prudential and Insight which would have funded most of the £400m for Resolution to take a 49 per cent stake in B&B. Cowdery already owns 2.9 per cent of B&B.

John Charcol senior technical manager Ray Boulger says: “The bad news for mortgage borrowers is that, in the long term, if Cowdery’s plans succeed, competition will be reduced as he merges his acquisitions.

“However, consolidation is probably going to happen anyway and this negative pales into insignificance if Cowdery’s interest acts as a catalyst to start restoring some confidence in the banking sector.”

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