Shares in Bradford & Bingley soared 17.1% yesterday despite the board's rejection of a £400m restructuring plan from Clive Cowdery's investment vehicle Resolution.

Shares in Bradford & Bingley soared 17.1% yesterday despite the board's rejection of a £400m restructuring plan from Clive Cowdery's investment vehicle Resolution.

Cowdery's plan appears to have the backing of several heavyweight institutions, including Standard Life - a 5.35% shareholder, Legal & General, Prudential and HBOS investment arm Insight. Between them the institutions own more than 13% of the company while Cowdery has also amassed a personal 2.9% stake.

But Bradford & Bingley's board told shareholders today that it had rejected Cowdery's plans that would have seen investors inject £400m into the company via Resolution, which would end up with a stake of between 30% and 50%.

They said the proposal "would involve Resolution's taking effective control of the company".

It is a rival to plans already unveiled by Bradford & Bingley that will give American private equity investor Texas Pacific Group (TPG) a 23% stake in return for a capital injection of £179m, the equivalent of 55p a share. It plans to raise another £258m through a rights issue next month.

B&B published the prospectus for this fundraising last night. But it has been criticised by some investors for undervaluing the company even as it faces rising defaults on its buy-to-let dominated mortgage book.

It is thought that the investors backing Resolution's plan would provide the required financing at around 72p a share. Last night the company's shares closed up 11.25p at 77.25p.

The fact Cowdery views a substantial stake in Bradford & Bingley as a platform for engineering consolidation in a sector that he thinks is too fragmented boosted the shares of one possible target Alliance & Leicester. It finished the day up 7% at 315.5p.

The proposals come just weeks after Cowdery completed the sale of his original Resolution investment vehicle, which amassed books of closed life insurance funds to rival Pearl for £4.9bn.

He retained the use of the Resolution name.