Shares in British bank Bradford & Bingley fell on Monday by 30 percent after it issued a profits warning, agreed to a massive cash injection from a US investment fund and lost its chief executive.

Bradford & Bingley, which deals in mortgages for investors buying homes to let out, saw its shares dive by 28.05 percent to 63.5 pence in early trade, valuing it at £392-million (€495-million, $796-million).

The cash-strapped bank, which has suffered from a property market slowdown in Britain this year, warned Monday that increasing levels of unpaid debt had slashed profits this year. Shares were briefly suspended after the news.

B&B has also agreed to sell more than a fifth of its capital to US investment group TPG Capital for £179-million, as it seeks to secure fresh capital amid the global squeeze on credit.

The stream of negative news comes one day after Bradford & Bingley announced the resignation of its Chief Executive Steven Crawshaw for health reasons.

"Difficult economic conditions have led to a decline in net interest margin and increasing arrears," the British bank said in a trading update on Monday.

B&B said that it made a pre-tax loss of £8.0-million in the four months of 2008. That contrasted with pre-tax profits of £107-million in the same period last year.

Underlying profits almost halved to £56-million in the four months to the end of April, compared with £108-million in the same period last year, it added.

US group TPG Capital, meanwhile, was to become the largest single investor in the British bank.

"TPG Capital, a leading global private investment firm, has agreed to invest approximately £179-million and become a major strategic investor owning 23 percent of the company upon completion," said the bank.

TPG was to buy the stake at 55 pence per share in two tranches, which would grant it the right to appoint two non-executive directors to the board.

In addition, the bank said it would cut its proposed rights issue to £258-million, compared with the £300-million that was outlined in May.

The new stock would also be sold at 55 pence, which was far lower than the 82 pence quoted earlier this year.

The issuing of new shares and the TPG investment would provide total additional capital of about £400-million.

AFP