June 2 (Bloomberg) -- Bradford & Bingley Plc, the U.K.'s largest lender to landlords, fell the most since going public in 2000 after announcing plans to sell shares at a 33 percent discount and saying the housing market is deteriorating.

Bradford & Bingley declined 24 percent in London trading today as the bank slashed the price of its rights offering and said it will sell a 23 percent stake to TPG Inc. for 179 million pounds ($353 million). It had a pretax loss of 8 million pounds in the first four months of the year, and Chief Executive Officer Stephen Crawshaw resigned for health reasons, the Bingley, England-based company said in a statement.

The injection by Fort Worth, Texas-based TPG to stabilize Bradford & Bingley comes almost nine months after the U.K. government bailed out Northern Rock Plc, the country's third- biggest mortgage lender. British banking stocks including HBOS Plc, the country's largest mortgage lender, fell on concern that foreclosures will rise as the domestic housing market worsens.

``They are clearly signaling a deterioration in the housing market and overall credit quality,'' said Robert Talbut, London- based chief investment officer at Royal London Asset Management, which manages $60 billion including Bradford & Bingley stock. ``We are not out of the woods as far as the credit crisis is concerned, and the real economy effects are rippling through.''

`Watch Negative'

Bradford & Bingley, which provides one in five buy-to-let loans in the U.K., fell as low as 60 pence and closed down 24 percent to 67 pence, valuing the bank at 414 million pounds. The shares have dropped 75 percent this year, the worst performance in the FTSE All-Share Bank Index.

Fitch Ratings today cut its long-term issuer default rating on Bradford & Bingley to ``A-'', from ``A'' and placed it on ``watch negative.''

Edinburgh-based HBOS Plc fell as much 10 percent, the biggest decline since its IPO in September 2001, closing at 360 pence. London-based Alliance & Leicester, which gets a quarter of its revenue from mortgages, declined 5.2 percent.

HBOS's rights offer is ``proceeding according to plan,'' it said in a statement today. Its business ``remains satisfactory.''

TPG, started by David Bonderman and Jim Coulter and formerly known as Texas Pacific Group, bought TXU Corp. last year in the largest U.S. leveraged buyout. It led a $7 billion investment in Washington Mutual Inc., the largest U.S. savings and loan.

Introduced by Goldman Sachs

The Bradford & Bingley investment would be TPG's first investment in Europe since it acquired Telediffusion de France, a French owner of television and radio broadcast towers, in October 2006, according to data compiled by Bloomberg. Goldman Sachs Group Inc. introduced TPG to Bradford & Bingley a month ago, while Deutsche Bank AG advised TPG.

Bradford & Bingley said loan payments three months or more in arrears rose to 2.16 percent of total loans at the end of April from 1.63 percent on Dec. 31. The company said it is ``cautious about economic conditions for the rest of the year.''

Almost 1 percent of so-called buy-to-let mortgages for landlords in the U.K. were more than three months in arrears in the first quarter, up 50 percent from a year earlier, the Council of Mortgage Lenders said last month. Mortgage lending may fall 45 percent this year, according to estimates last week by HBOS.

Bradford & Bingley took a bad-loan charge of 36 million pounds and 64 million pounds for its structured-finance investments, the company said.

Crawshaw, 47, will be replaced by Chairman Rod Kent until a successor is found. Crawshaw was criticized when the bank announced the original share sale May 14, one month after the bank denied ``press speculation'' about the need for additional cash.

`Too Many Mistakes'

``We've made too many mistakes recently,'' Kent told analysts on a conference call today. ``It's my job to correct those.''

The stock sale initially gave Bradford & Bingley investors the right to buy 16 shares for every 25 they own at 82 pence apiece. The bank now will offer 19 shares for every 25 at a price of 55 pence apiece, the statement said. The offering is underwritten by UBS AG and Citigroup Inc.

Bradford & Bingley was facing an ``underwater and failed rights issue'' that left underwriters holding the stock, Kent said. The new deal lets retail investors buy the stock and ``is not a question of letting underwriters off the hook,'' he said.

Bradford & Bingley announced its rights offer after Royal Bank of Scotland Group Plc and HBOS asked their investors for a total of 16 billion pounds to shore up their balance sheets. Financial services companies have announced writedowns and credit losses of $386.7 billion globally related to the collapse of the subprime mortgage market in the U.S., according to data compiled by Bloomberg.

`Well Capitalized'

The U.K. government had to step in after Newcastle-based Northern Rock, which like Bradford & Bingley has headquarters in Northern England, sought emergency funding from the Bank of England last year and failed to find a buyer. It was nationalized nine months after suffering the first run on a British bank in more than a century.

Bradford & Bingley is ``well capitalized,'' has funding into 2009 and has no problem with liquidity, Kent said after an analysts asked whether precautions were in place to prevent a run on the bank.

The bank has been hurt by the seizure in credit markets because it depends on wholesale funding rather than bank branches for more than 50 percent of its funding. That compares with more than 70 percent wholesale funding at Northern Rock and less than 30 percent at HSBC Holdings Plc.

Bradford & Bingley has a core Tier 1 ratio of 9.2 percent, Crawshaw said in May. It aims to maintain the ratio, a measure of financial strength, at 8 percent to 10 percent.

Building Society

Bradford & Bingley, with roots in building societies going back to 1851, has reduced the number of home loans it offers since April, raised prices on mortgage products and lifted borrowers' minimum deposits. Losses on its structured-finance portfolio climbed by 38 million pounds in the first quarter, the company said at the time.

The British pound fell the most in three weeks on speculation that Bradford & Bingley would have to raise more capital. The pound declined to $1.9619 against the dollar at 10:46 a.m. in London from $1.9823 in New York last week. It also fell to 79.28 pence per euro from 78.46 and to 205.57 yen from 209.16 yen.

Bradford & Bingley was forecast to have net income of 150.5 million pounds this year, according to the median estimate of 11 analysts surveyed by Bloomberg. The bank's 2007 profit dropped 48 percent to 93.2 million pounds as it wrote down investments and sold assets.

To contact the reporters on this story: Jon Menon in London at jmenon1@bloomberg.net; Edward Evans in London at at eevans3@bloomberg.net

Last Updated: June 2, 2008 12:20 EDT