Rock chairman holds out hope shareholders will get money back

The chairman of Northern Rock yesterday said there was still a good chance of shareholders getting some of their investment back, despite the bank's sale prospectus inviting bidders to break it up.

Some advisers involved in the Northern Rock rescue process have said shareholders will probably end up with nothing. The Government and the Bank of England have limited sympathy for the bank's institutional investors, who they believe allowed management to pursue a reckless dash for growth.

But Bryan Sanderson said of shareholders' prospects: "I am still hopeful. There is a good set of assets there and, even in the difficult external circumstances with the risk aversion we have around, I still think that will come through in the end, though I don't know."

Mr Sanderson, who took over as chairman last month, also said he was planning an overhaul of Northern Rock's board to bring in new non-executive directors with the right experience to guide the stricken bank as it tries to determine its future in the next few months.

"I'm clearly considering the board and am endeavouring to come up with something that is fit for purpose for what we have to address in the next few months. That means bringing in people with the right experience," Mr Sanderson said.

He said that he wanted to bring in two or three non-executives to beef up the board's expertise in legal and accounting matters ahead of a complex restructuring or sale process. Mr Sanderson declined to comment on further details of his plans.

Northern Rock's advisers have asked bidders to submit proposals by today, though the company expects many to arrive late or in rough form. The bank and its advisers will then assess their viability and, where necessary, ask for more work to be done.

The company will consider proposals for all or part of its business and may seek to bring together suitors whose proposals fit together.

The options in the sales prospectus include a takeover of the whole business, selling off parts of the bank and a refinancing so that Northern Rock can continue to trade.

Northern Rock is being propped up by the Treasury and the Bank of England, which have lent the mortgage lender about £20bn at 1.5 percentage points over base rate.

The Treasury will in the next few days set out its principles in determining the fate of Northern Rock, adding detail to its basic tenets of financial stability, protection of customers and fairness for taxpayers.

Small shareholders, hedge fund investors such as RAB Capital, and the Northern Rock Foundation have all warned against a quick sale of the bank.

They argue that the bank is a good-quality business that has been hit by extraordinary market conditions as the credit markets that once funded its growth have dried up.