Bradford & Bingley’s recent troubles reflect the dire state of the buy-to-let market but won’t result in a collapse similar to that of Northern Rock, according to The Share Centre.

The latest announcements from Bradford & Bingley see its chief executive quitting, a plan to sell a 23 per cent stake to US investor Texas Pacific Group (TPG) and an anticipated profits warning.

These follow the announcement of a rights issue asking for £300 million – which has since been withdrawn and replaced by a restructuring deal attempting to raise £258 million from existing investors.

Graham Spooner, investment adviser at The Share Centre, says, ‘All these factors will leave private investors confused about what to do with their money – whether or not they were planning on taking advantage of the rights issue. However, although it does reflect the dire state of the buy-to-let market, we do not think B&B is another Northern Rock situation.’

Spooner believes that investors should wait until the last minute before making a decision to act, in the hope that the share price will settle down.

He says, ‘B&B has without doubt been among those worst hit by the credit crunch, having traditionally taken a higher proportion of its funding from wholesale money markets as opposed to individual savers. As a result its share price has already fallen sharply this year – falling a further 30 per cent this morning.

‘This poor performance, along with the relatively small discount on offer to investors in the rights issue (new shares at 55p and ordinary shares at 64p) leads us to continue to be negative about B&B for the short term at least, and we urge investors to wait until the last minute before making their decision.’

Bradford and Bingley’s executive chairman, Rod Kent, explains, ‘The last few weeks have been challenging for Bradford & Bingley, and this is a disappointing trading update, reflecting a more difficult market environment. I understand shareholders’ disappointment.

‘Nevertheless, with a strengthened capital base and the skills that TPG will bring, I am sure we can develop the business to exploit the opportunities available in our markets in the medium term.’

However, for those who are concerned, it would be wise to spread money across banks and building societies to ensure no more than £35,000 is invested with a single provider.