Bradford & Bingley’s hopes of securing a swift financial rescue were dealt a blow yesterday after a campaigning investor group told the bank’s small shareholders to consider blocking its £400 million bailout plan.

The UK Shareholders Association (UKSA) urged B&B’s 930,000 individual shareholders to attend next Monday’s emergency meeting and to demand answers about a £258 million rights-and-stake sale to TPG, the American private equity group.

Roger Lawson, a director at UKSA, said that the board, led by Rod Kent, the chairman, had failed to explain its rejection of a second financing proposal from Resolution, the investment vehicle. Retail investors account for about 40 per cent of B&B’s shareholder base. A mass protest vote, particularly if backed by fund managers in the City, could jeopardise the plan, which needs approval from a straight majority.

“Private shareholders will be totally bemused and confused by all this; that’s why we felt we needed to issue something,” Mr Lawson said.

Mr Lawson said that Mr Kent had telephoned him yesterday to protest against the UKSA’s stance and explain B&B’s position. “He didn’t tell me anything new,” Mr Lawson said.

Mr Lawson denied that his view could help to destabilise B&B and he encouraged small shareholders to “go to the EGM, listen to the chairman, ask questions. If he can convince you to vote for him, then fine.”

Resolution, the insurance vehicle of Clive Cowdery, pulled out last week after it was twice denied access to the bank’s books. Resolution would have pumped in £400 million at 72p a share, while TPG is being offered its shares for 55p. Resolution’s team would own 55 per cent of B&B but control 29.9 per cent. If approved, TPG will have a 23 per cent stake.

B&B said that Resolution’s plan did not meet its requirements on what it called certainty, clarity, change of control and price. Resolution has indicated that it would rekindle its interest if it was invited to do so by B&B.

B&B, Resolution and TPG declined to comment.

Equity talks

— London Scottish Bank, Britain’s second-largest sub-prime lender, is in talks to raise fresh equity of at least £45million, which could trigger a full takeover offer. It reported first-half losses of £7.4 million.

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