Mortgage lender Bradford & Bingley has refuted rumours that it plans to launch a rights issue.

The group's board was said to be facing a decision on whether to go ahead with the move, which would see the firm sell new shares in order to raise capital.

The reports claim that the bank is likely to to try to raise hundreds of millions of pounds to boost its balance sheet.

But Bradford & Bingley have insisted that no such plans exist.

A spokesman said: "Contrary to press speculation, Bradford & Bingley is not intending to issue equity capital by way of a rights issue or otherwise.

"Bradford & Bingley has a strong capital base, above its regulatory requirements, and as a result of the board's conservative approach, has funded its business activities through 2008 and into 2009.

"In the current market environment, the board will naturally continue to monitor closely the balance sheet strength of the business and its funding plans."

The group, which is one of the UK's biggest buy-to-let lenders, has been the subject of regular speculation since the credit crunch first hit.

It previously raised more than a quarter of its capital through the wholesale money markets before these effectively dried up, triggering the problems that ultimately led to the nationalisation of Northern Rock.

The group has since focused on funding its lending through retail deposits, taking in £1.3bn during the first four to six weeks of this year, and it now regularly features on best buy tables as it looks to attract more savers.

But it is still thought to have scaled back its lending in recent months, along with most other mortgage groups.

Last month ratings agency Moody's downgraded the group's long-term ratings to reflect slower business growth, a deterioration in its asset quality and a weaker capital position.

Bradford & Bingley's share price has fallen by 35% since the beginning of the year to close on Friday at just 167.25p.

Copyright © PA Business 2008

www.bradford-bingley.co.uk/ (Bradford & Bingley)