Shareholders' outrage as B&B payout calls snubbed

Former B&B investors will receive letters this week informing them they will be left completely out of pocket following an independent evaluation of the business – crushing hopes they would receive up to 1 per share.

B&B's loan book was nationalised and its savings arm sold off to Spanish banking giant Santander two years ago at the height of the financial crisis.

PricewaterhouseCoopers valuer Peter Clokey said he made his decision that the former shareholders should not be compensated after weighing up representations from a wide range of groups and individuals.

But small investors are furious they won't receive a single penny for their lost shares.

The B&B Shareholders Action Group, which is consulting its lawyers, is to appeal against the decision and, if it is upheld, will mount a legal challenge against the Treasury.

Shareholders can also appeal to Mr Clokey to change his decision by writing to him before the end of August, but he is expected to uphold it.

A spokesman for the B&B Shareholders Action Group, Richard Jennings, said: "It's an absolute travesty of justice, not just for B&B shareholders but for UK shareholders in general. We said investors should receive up to 1 per share.

"This shows that the Government can dispossess shareholders, many of whom are pensioners.

"We believed the statements made by the company and trusted the legal system."

The Action Group is now planning to raise a war chest to fight the decision.

B&B's shares closed at 20p on the final day of trading before the nationalisation and break-up of the group.

The action group, which had previously said that any valuation below 55p a share would be "tantamount to theft", said Mr Clokey had delivered "a damning verdict on the rights of UK shareholders".

Mr Clokey, who was appointed by the former Government, decided Bradford & Bingley – which had seen 173m flood out of its holdings in the two days before nationalisation – would have fallen into administration, leaving nothing for shareholders.

But the action group argued yesterday his 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," said Mr Jennings.

"It appears that Mr Clokey has completely ignored the body of evidence we produced which supports a valuation approaching a pound a share."

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, after an order was passed that required compensation to be paid to shareholders based on the value of the shares on the morning they were taken away from them.

But investors believe this was a low point in the company's value coming after days of speculation there would be a run on the bank and reports it was about to collapse.

Analysts had estimated that 80p a share would have been a fair value.

B&B, which listed on the London Stock Exchange in December 2000, was one of Britain's best known building societies, formed from the 1964 merger between the Bradford Equitable Building Society and the Bingley Building Society.

Many of B&B's one million small investors received shares in the bank when it demutualised in 2000. Most live in Yorkshire and Lancashire.

Small shareholders are furious the Government agreed to bail out the big banks, but B&B and Northern Rock were allowed to collapse.