Bradford & Bingley this morning raised £300 million in an emergency rights issue to shore up the mortgage bank's balance sheet.

The move marks a dramatic U-turn for the bank, which only weeks ago denied a report that it was contemplating a rights issue.

Steven Crawshaw, Bradford & Bingley's chief executive, said on a conference call today. "We were not at that point intending a rights issue."

The 16 for 25 issue at an issue price of 82p per share represents a 48 per cent discount to yesterday's 158.75p per share closing price. The group said the rights issue was fully underwritten by Citigroup and UBS. The group's shares fell 9.75p to 149p in early trading.

The bank, a buy-to-let specialist which has been badly hit by the credit crunch, said in a statement to the market this morning that the proceeds of the rights issue will "strengthen the group's capital position and will mitigate the impact of the previously announced reductions in the value of certain of the group's treasury investments."

Mr Crawshaw, Bradford & Bingley's chief executive, said: "The improved financial strength will ensure we are even better placed to pursue our strategy of providing high quality savings and mortgage products in a competitive market."

Mr Crawshaw said a shareholder circular will be printed next week and the group will hold an extraordinary general meeting (EGM) in mid June.

In response to why the group did not announce the rights issue with its interim statement on 22 April, Mr Crawshaw said that "a month makes a big difference". He said there were a number of unanswered questions at the time of the interim statement and a more stable environment was required for launching a rights issue.

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