HOWZAT

Those who decline the offer can sell their rights or let them lapse, in which case they will receive the prevailing market price for them, minus dealing costs.

However, Hunter added: “The glimmer of light here is that B&B will be taken over. There has been speculation that Lloyds TSB might buy the business. The acid test is would you invest £1,000 cold in B&B?

“I would still say there is better value elsewhere, however steelier investors with less aversion to risk might say otherwise.”

SAVERS

Analysts insist that this isn’t another Northern Rock — they say the bank is solvent and appears to be in no danger of defaulting.

However, savers may still prefer to limit deposits to the £35,000 that would be 100% protected by the Financial Services Compensation Scheme (FSCS) should the bank default. There are some gaps in the scheme, however. If you also have a mortgage with B&B you may not get all of your money back in the unlikely event that the bank is unable to pay out to savers.

Kevin Mountford of Moneysupermarket, a comparison site, said: “The government is burying its head in the sand over the need for reform to the FSCS. We have warned about foreign banks, but now some UK brands are looking to be more risky propositions.”

The bank said: “Our overriding message to customers is that your savings with us remain secure. We remain an extremely well-funded business with over £50 billion worth of assets.”

Savers were also urged to be wary about a new 7% bond from the bank that is only available to those who invest at least £50,000.

Mountford said: “B&B is in the spotlight for all the wrong reasons. In the long run your money might well be safe — but you have to ask if you really want to expose yourself beyond £35,000.”

“In today’s market 7% has become the new norm. If B&B is trying to entice those with big sums, the proposition needs to be more compelling.”

You could also earn more than 7% from the likes of Birmingham Midshires, Icesave, and West Bromwich.

HBOS SHAREHOLDERS

Analysts are even more divided as to whether the HBOS rights issue is a good deal. Ben Yearsley, of Hargreaves Lansdown, an adviser, said: “Shareholders are right on the borderline of whether it’s worth doing. It is touch and go.”

The rights-issue price is £2.75 per share. The shares closed on Friday at £2.66 and have fallen to as low as £2.61 in the past fortnight.

Hunter said: “HBOS has been a bumpy ride but up until last week there has been some value in taking up the rights issue if you look at the close price each day.

“However, if the price doesn’t recover, shareholders may just as well purchase shares on the open market.”

Hunter, said: “The general market view on HBOS shares is that it’s a weak hold. The concern is that even though it has said it would raise some of this money to grow its international business, the fact remains that HBOS is very UK-centric. RBS, on the other hand, has more worldwide interests and for that reason I think it will be the preferred of the two.”

If you decide not to buy new shares, you can sell your entitlement. The price you will receive depends on the market conditions.

SAVERS

HBOS has not been immune from the credit crunch and announced a £2.8 billion write-down of its assets because of investments that were jeopardised by the sub-prime mortgage meltdown in America.

However, analysts are confident the bank, which owns Birmingham Midshires and Bank of Scotland, has the ability to repay savers.

*Last week we incorrectly reported that First Save was only part-covered by the FSCS. First Save products are offered by FBN Bank, which is registered in the UK. Investors in First Save products are covered for up to £35,000 and would not need to go to another country for compensation.

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