LONDON (ShareCast) - Pressure on Bradford & Bingley over its sale of shares to US group TPG mounted as the Association of British Insurers heavily criticised the move for its "unacceptable" treatment of investors.

The ABI has issued an amber top warning, its second most severe guideline, and advised shareholders to make a "considered judgement" over whether to back the £400m fund raising.

The institutional shareholders' lobby group added it would have issued a red top warning but for B&B's "exceptional circumstances" saying the plan breached shareholders' pre-emption rights.

The ABI also said the proposal unfairly reduced shareholders' scope for dissent by making approval of the rights issue conditional on approval of the Texas Pacific deal.

"The proposals by Bradford & Bingley involve breaches of fundamental principles of sound governance which are unacceptable to shareholders," ABI Director of Investment Affairs Peter Montagnon said in a statement.

B&B cut the price of its rights issue from 82p to 55p and brought private equity group Texas Pacific in as a 23% shareholder after it slumped into a surprise loss in the first four months of 2008.

This week, closed end insurance specialist Resolution proposed its own £400m injection into B&B to replace the TPG plan and use it as a consolidation vehicle for other mortgage lenders.

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