A Bahamas-based British billionaire has amassed close to a 7 per cent stake in Bear Stearns in a bet that the investment bank will bounce back from the 34 per cent fall in its share price this year.

Joseph Lewis, a currency trader and investor, is now the investment bank's single largest shareholder after a stake-building operation which began two months ago.

The disclosure of his stake comes after weeks of speculation that a big investor would take a stake in Bear to help shore up finances and slow the decline in its shares - which plunged after bad mortgage bets caused two of its proprietary hedge funds to collapse this summer.

However, most of that speculation focused on large financial institutions, including perhaps a Chinese bank, rather than an individual investor.

Analysts said that while the investment represents a vote of confidence in Bear - and investment banking shares in general - it does not provide the kind of balance sheet support that Bear might need if it was forced to record major losses on mortgage backed securities it continues to hold. Bear reports third-quarter earnings on September 20th.

Bear shares were up just 1 per cent in midday New York trade yesterday, indicating that the investment by Mr Lewis did not dispel investor concerns about the bank's future.

Mr Lewis left the UK in 1979 to avoid high tax rates. His other investments include a controlling interest in Tottenham Hotspur through co-ownership of Enic. He featured in the 1991 inquiry into the purchase of a site in Ballsbridge by Telecom Éireann.

The investigating inspector concluded that Mr Lewis - an associate of businessmen Dermot Desmond and JP McManus - was not as claimed a shareholder in UPH, one of the companies involved in the controversial deal that saw a site bought for £4 million sold to the state company for £9.4 million. The inspector concluded he held them in trust for Mr McManus. - ( Financial Times )