241 Pizza

The news sent shares in the banking sector tumbling. Shares in HBOS fell 8.31 per cent, despite the group issuing a statement that its rights issue is proceeding according to plan and current trading is satisfactory. Alliance & Leicester shares were down almost 7 per cent to 397.5p and Lloyds TSB and Barclays fell more than 2 per cent.

Meanwhile, shares in Royal Bank of Scotland, which is raising £12bn from shareholders, dropped 1.5 per cent, to 225p, despite reaffirming its trading update, given on April 22, in an attempt to reassure investors. The bank said buy-to-let mortgages make up only 1 per cent of its UK loan portfolio. Its shares have fallen 65 per cent in the past 12 months.

TPG’s 23 per cent stake makes it B&B’s largest shareholder, giving the investment group the right to appoint two non-executive directors to the board.

Goldman Sachs introduced TPG to B&B "about a month ago" as potentially interested investors. The group came into this deal "in the last few days", Mr Kent said.

TPG’s first buyout was of the bankrupt Continental Airlines in 1993 and it has gone on to acquire airlines and invest in food and retail companies, including Burger King and Debenhams. The group has also made moves into the financial services sector, including an investment of $7 billion in Washington Mutual in April this year.

B&B said today that its credit impairment charge for the first four months was £36 million compared with £27 million for 2007, blaming house price deflation and a rise in the number of people in arrears.

The group said it had lost £15 million due to “a small number of organised mortgage frauds”.

It added insurance recoveries may be available against these losses but this had not been taken into account.

Talking to analysts this morning, Mr Kent said it was a “collusive fraud”, involving “a bent property developer, a bent solicitor and a bent valuer, allegedly.” He added it was a fraud against the borrower as well as the bank and was based on the property being overvalued.

He said: “Fraud always increases on a downturn and tends to come in pockets. We hit a pocket… We do expect a pocket or two in the second half of the year. That’s the nature of the type of difficult trading environment we expect to be in the second half of the year.”

B&B said in light of the tightening credit conditions, it would reduce maximum loan-to-value levels, tighten lending criteria and raise credit scorecard cut-offs. It will also tighten the management of panel valuers and increase resources in arrears and collections.

Dresdner Kleinwort cut its recommendation on shares to a "sell" with a target price of 55p. Collins Stewart retained its "sell" recommendation with a target price of 89p.

Mr Crawshaw is in line for a pay-off of up to £640,000 after stepping down as chief executive of B&B.

A spokesman for the group refused to be drawn on whether Mr Crawshaw had been forced to resign, but said he was leaving due to ill health.

Yesterday B&B said it was discussing the financial terms of Mr Crawshaw’s departure. If B&B terminates his contract, he is entitled to 12 months’ salary. His basic salary was £640,000 last year. He will also take with him a pension pot worth £1.8 million.

Three weeks ago, Mr Crawshaw was forced to apologise after announcing a £300 million capital raising despite ruling one out the previous month. The lender revealed earlier that bad debts rose by 42 per cent last year.

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