Rock shareholders lodge £2bn compensation claim
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Your support makes all the difference.Small shareholders seeking £2bn in compensation following the nationalisation of Northern Rock have applied for a judicial review into the terms of the Government's takeover of the troubled lender that they allege are "deliberately rigged" to give them nothing.
Under the nationalisation, the Government said it would appoint an independent valuer to determine the value of the business and thus how much its 150,000 shareholders should receive in compensation.
Roger Lawson, head of the UK Shareholders Association, which is representing smaller Northern Rock shareholders, said it decided to move ahead with its judicial review application after the Government rejected its complaints about the conditions of the valuation process.
The Government set out clear parameters by which the valuer must evaluate Northern Rock: one, that it was unable to continue as a going concern, and two, to value it as a group in administration. Mr Lawson said they were tantamount to assigning the company a value of zero. He said: "They have set completely artificial terms of reference to avoid paying any money."
According to the last set of accounts, published earlier this month, Northern Rock was shown to have a net asset value of about £3.20 per share. On this basis, said Mr Lawson, "we'd be looking at a price of higher than £5 per share [about £2bn]. That's nothing compared to what they'll be able to sell this business for in a couple years."
A key part of shareholders' case is that at the time of Northern Rock's decision to call on the Bank of England's lending facilities, it was a perfectly solvent bank.
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