Blackfriar: It's such a shoddy way to treat B&B shareholders

It's been a sorry week for former shareholders in collapsed bank Bradford & Bingley.

They have been informed they will get absolutely no compensation for their shares following a review by independent valuer Peter Clokey at PwC.

Representatives of the one million small investors are planning to mount a legal challenge against the Treasury following the decision.

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Former B&B investors had hoped to receive up to 1 per share.

Shareholders can appeal to Mr Clokey to change his decision by writing to him by August 27, but sadly for them he is expected to uphold it.

Richard Jennings, spokesman for the B&B Shareholders Action Group, described the decision as "an absolute travesty of justice".

"Not just for B&B shareholders but for UK shareholders in general," he said. "We said investors should receive up to 1 per share. This shows that the Government can dispossess shareholders – many of whom are pensioners."

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The Action Group is arguing that Mr Clokey's determination bears no economic resemblance to the value of the bank at the point of nationalisation.

"We have always, and continue to assert that the bank was both adequately capitalised and solvent when taken into Government ownership," argued Mr Jennings.

There has been an outcry about the parameters Mr Clokey was set by the Treasury to evaluate what compensation should be paid. Mr Clokey was instructed to work out what the value of the B&B shares were at 8am on the morning of September 29, 2008, the day the bank was nationalised.

Angry shareholders will now try to get that date changed. Investors believe this was a low point in the company's value coming after days of speculation that there would be a run on the bank and reports that it was about to collapse.

But there is actually a much wider issue here.

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Why did the former Government allow B&B to collapse when it rescued Halifax Bank of Scotland and Royal Bank of Scotland? Was it because they were too big to collapse? If you take this argument through to its logical conclusion then shareholders in smaller midcap companies should sell up because it appears the only companies that are guaranteed rescue are their bigger FTSE 100 rivals.

Something has gone badly wrong with the system.

Shareholders in B&B have been treated shoddily and the new Conservative/LibDem coalition should admit this and sort the mess out. Shareholders at least deserve to receive the 20p the shares were worth on the final day of trading before the nationalisation and break-up of the group.

n AT last, some light at the end of the tunnel for the IPO market.

Flotations on the main market started to recover in the second quarter, with the value of IPOs increasing by 905m quarter on quarter.

But AIM is still a tough place to be.

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There were 10 IPOs on AIM in the second quarter with a total value of 133m, compared with eight listings raising 217m in the first quarter.

"This would appear to reflect continuing caution among the investor community as to the prospects for companies interested in coming to the market," said Arif Ahmad, partner and head of AIM at PricewaterhouseCooper in Leeds.

Reflecting this, two new Yorkshire AIM entries are taking the reverse takeover route to market, bypassing some of the complexity of a flotation.

York's Tissue Regenix recently reversed into technology firm Oxeco, and Rotherham's Documetric hopes to reverse into software company Intelligent Environments.

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Documetric's chief executive Rami Cassis likes a challenge. He founded the company in 2007, staking his "entire net worth" on the deal. So while markets may be tough, his predatory move to AIM shows entrepreneurial spirit is alive and kicking.

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