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Treasury 'eyes autumn Rock sale' Treasury 'eyes autumn Rock sale'
(about 2 hours later)
The Treasury is investigating the prospect of selling state-owned bank Northern Rock as soon as the autumn, according to a report in the Times.The Treasury is investigating the prospect of selling state-owned bank Northern Rock as soon as the autumn, according to a report in the Times.
Finding a City buyer or a stock market flotation are both options, it said.Finding a City buyer or a stock market flotation are both options, it said.
Selling the Rock to the private sector at a profit would look good politically but only if it delivers the full value to taxpayers, the paper said. Selling the Rock to the private sector at a profit would look good politically if it got full value, the paper said.
Treasury sources said it was "very unlikely" the Rock would be sold this year, saying that ministers were "in no hurry" to push through a disposal.
Separately, former Rock investors go to court on Wednesday in a renewed attempt to be compensated for their shares.Separately, former Rock investors go to court on Wednesday in a renewed attempt to be compensated for their shares.
They are trying to overturn a government compensation scheme, which they say will result in their shares being worthless in the wake of nationalisation.They are trying to overturn a government compensation scheme, which they say will result in their shares being worthless in the wake of nationalisation.
But analyst Ralph Silva of Tower Group told the BBC that shareholders should wait until the bank was sold and that then - with a value placed on it - they would be better placed to claim compensation.But analyst Ralph Silva of Tower Group told the BBC that shareholders should wait until the bank was sold and that then - with a value placed on it - they would be better placed to claim compensation.
Voter factorVoter factor
Northern Rock experienced the first run on a UK bank in more than a century after it was forced to seek emergency funds from the Bank of England in September 2007.Northern Rock experienced the first run on a UK bank in more than a century after it was forced to seek emergency funds from the Bank of England in September 2007.
The Times said the Treasury was in no hurry to sell the Rock - which has been repaying the government. It still owes £8.8bn of the £27bn it was loaned at the end of 2007.The Times said the Treasury was in no hurry to sell the Rock - which has been repaying the government. It still owes £8.8bn of the £27bn it was loaned at the end of 2007.
The bank has cut staff volumes and slashed the size of its mortgage book - its only real asset - to £100bn.The bank has cut staff volumes and slashed the size of its mortgage book - its only real asset - to £100bn.
The paper said that a sale of the bank at a profit could help convince voters that Gordon Brown had overcome the crisis that led the UK banking system to near collapse.The paper said that a sale of the bank at a profit could help convince voters that Gordon Brown had overcome the crisis that led the UK banking system to near collapse.
The government's aim has always been to eventually sell the Rock - but if it did manage to offload it during 2009 at a good price, this would be well ahead of most expectations, observers say.The government's aim has always been to eventually sell the Rock - but if it did manage to offload it during 2009 at a good price, this would be well ahead of most expectations, observers say.
Legal actionLegal action
Lawyers for the former Northern Rock shareholders say that when the government took over the bank and the shares of the investors without compensation, it was a breach of human rights.Lawyers for the former Northern Rock shareholders say that when the government took over the bank and the shares of the investors without compensation, it was a breach of human rights.
They claim that there should be compensation that reasonably relates to the value of the bank.They claim that there should be compensation that reasonably relates to the value of the bank.
The case has been brought by two major investors, SRM Global and RAB Capital, and up to 200,000 private shareholders who held as much as 25% of the shares in the Newcastle-based bank.The case has been brought by two major investors, SRM Global and RAB Capital, and up to 200,000 private shareholders who held as much as 25% of the shares in the Newcastle-based bank.
The private shareholders, including existing and former Northern Rock employees - many at risk of losing their retirement "nest egg" shares - are backed by the UK Shareholders Association.The private shareholders, including existing and former Northern Rock employees - many at risk of losing their retirement "nest egg" shares - are backed by the UK Shareholders Association.
But there is concern that the institutional investors - some of whom had bought Northern Rock shares towards the end of its life as a private firm - had bought into the firm on the gamble that they would be compensated by the government should things go wrong.But there is concern that the institutional investors - some of whom had bought Northern Rock shares towards the end of its life as a private firm - had bought into the firm on the gamble that they would be compensated by the government should things go wrong.
In an earlier High Court action, a judge ruled that, had the Bank of England not stepped in to save the Rock, it would have been unable to pay its debts and it would have had to cease business.In an earlier High Court action, a judge ruled that, had the Bank of England not stepped in to save the Rock, it would have been unable to pay its debts and it would have had to cease business.