UPDATE 1-UK bank B&B ups rights issue size after TPG quits

LONDON, July 4 (Reuters) - British bank Bradford & Bingley BB.L plans to increase the size of its rights issue to 400 million pounds ($794 million) after U.S. private equity firm TPG Capital pulled out of a plan to buy a stake, the bank said.

TPG [TPG.UL] pulled out after ratings agency Moody's cut its debt ratings, triggering a clause allowing TPG to terminate the agreement, B&B said.

B&B had planned to sell TPG a 23 percent stake for 179 million pounds and raise 258 million through a rights issue. It said it would now seek to raise a net 400 million pounds through the rights issue.

The subscription price will remain at 55 pence per share.

B&B said in a statement that several of its biggest shareholders, including Standard Life (SL.L: Quote, Profile, Research), M&G (PRU.L: Quote, Profile, Research), Legal & General (LGEN.L: Quote, Profile, Research) and Insight (HBOS.L: Quote, Profile, Research) were supporting the enlarged rights issue.

Citi (C.N: Quote, Profile, Research) and UBS (UBSN.VX: Quote, Profile, Research) will continue to underwrite the enlarged rights issue, the bank said.

B&B, Britain's biggest buy-to-let lender, is in need of cash after a slump in the UK housing market. ($1=.5036 Pound)