Bradford & Bingley, the leading buy-to-let lender, may now be virtually worthless. The company’s shares fell by a further 8p (16%) to 42p yesterday, far below the 55p at which the £400 million rights issue is priced.

Investment bank Fox-Pitt, Kelton, which specialises in the financial services industry, said: "We cannot rule out the possibility of an effective failure, with shareholders receiving little or nothing for their shares," and one of FPK’s analysts wondered whether B&B may be “Northern Rock in slow motion.

B&B says it has a £2bn funding facility in place until early 2009, but Fox-Pitt is forecasting losses by 2010.

Whatever happens to B&B's share price, depositors’ money – a total of £21bn - is safe, up to the £35,000 guaranteed by the Government.

Moody's, the credit-rating agency, put the skids under the original rescue package last week by downgrading B&B. That prompted hedge fund TPG to walk away, and made it increasingly difficult for B&B to raise funds.

With the rights issue under pressure, there now seem to be few alternatives left to an  eventual takeover by, or merger with, another bank – though it is not clear which one would be prepared to take on B&B’s liabilities. The only other long-term option would be to put B&B into run-off, taking on no new business and gradually selling off the mortgage book.

Orchestrated by the Financial; Services Authority, leading banks HSBC, Lloyds TSB, HBOS, Barclays, Abbey and Royal Bank of Scotland have agreed to take £230 million of the B&B rights issue, with shareholders Standard Life, Legal & General, Prudential and Insight taking a further £120 million.

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