Bradford & Bingley appears to have been caught badly on the hop a month ago by a Sunday newspaper report that it was poised to launch a rights issue. Yes, like most battered UK banks, it was exploring the options. But no, it wasn't ready to press the button on a deal quite yet.

It would have looked weak to say that it was thinking about it and worse still to say nothing at all. It didn't want to move immediately, and so it concluded that it was better to issue a denial but leave itself with a get-out clause, allowing it to change its mind at a moment's notice.

Alas, the denial was a bit too unambiguous and explicit and the get-out clause (we continue to monitor our balance sheet strength) a bit too subtle. Anyone buying B&B shares in the past few weeks on the back of B&B's promise that its balance sheet remained “strong” will be understandably miffed.

B&B's balance sheet now is not materially weaker than it was a month ago. The difference now is that investors, not to mention regulators, want to see stronger capital ratios in banks.

Because of its smaller size and its reliance on wholesale funding, B&B liked to be near the top of the league tables for balance sheet strength. Rights issue announcements by Royal Bank of Scotland and HBOS eroded that differential and forced it to think again.

The same leap-frogging of banks up the balance sheet league tables must also be exercising Barclays, which is now looking a bit too much like Derby County. In its first-quarter results today, it is expected to reiterate that it has the luxury of time and will not be stampeded into capital-raising that could yet prove unnecessary. But it risks getting labelled as the weakest bank on the street if it does nothing.

B&B should not be too severely punished for its U-turn. Its treasury department's foray into the murky world of complex asset-backed securities was reckless, but no more egregious than most other banks.

The real test for Steven Crawshaw, the chief executive, is still to come. He has steered B&B aggressively into buy-to-let lending and self-certified loans. It remains to be seen how its loan book will cope with a serious UK downturn and a rise in unemployment - which on yesterday's official data looks a serious possibility. America hasn't dubbed self-cert mortgages “liars' loans” for nothing.

Meanwhile, with B&B floundering, the wave of building society demutualisations a decade ago (Halifax, Northern Rock, Alliance & Leicester et al) looks even more unfortunate. Not so much a triumph of popular capitalism as a disastrous exercise in value destruction.

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