The news this morning saw the lender’s share price plummet over 20 per cent to 68.25p.
This comes as B&B chief executive officer Steven Crawshaw quit his role over the weekend citing health reasons. He will temporarily be replaced by chairman Rod Kent who has become executive chairman.
The US private equity house will inject around £179m of funds. B&B will now only ask existing shareholders to raise £258m of new capital, down from the £300m announced last month.
Investment from TPG and the £258m raised from the rights issue will raise additional capital of around £400m. Shares will be issued at an offer price of 55 pence per share.
Underlying profits at B&B for the first four months of the year was £56m, down from £108m in 2007.
The lender made a loss before tax of £8m in Q1.
The lender had previously warned that arrears were set to rise and it has revealed that the number of people who are more than three months in arrears has soared from 1.63 per cent to 2.16 per cent over the last four months.
Kent says: “The last few weeks have been challenging for Bradford & Bingley, and this is a disappointing trading update reflecting a more difficult market environment. I understand shareholders’ disappointment.
“Nevertheless, I am delighted to welcome TPG as a major strategic investor in Bradford & Bingley. With a strengthened capital base and the skills that TPG will bring I am sure we can develop the business to exploit the opportunities available in our markets in the medium term.”