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Rock shareholder sell-off warning Rock shareholder sell-off warning
(about 1 hour later)
Northern Rock's largest shareholder has issued a warning over plans to sell off the troubled bank.Northern Rock's largest shareholder has issued a warning over plans to sell off the troubled bank.
The firm's preferred route out of its current crisis is to sell itself to other banks or financial institutions.The firm's preferred route out of its current crisis is to sell itself to other banks or financial institutions.
But the chief executive of RAB Capital, Philip Richards, said he would vote against a proposed takeover of the bank that did not properly value its shares.But the chief executive of RAB Capital, Philip Richards, said he would vote against a proposed takeover of the bank that did not properly value its shares.
BBC business editor Robert Peston said Mr Richards feared the bank's assets would command a low price at present.BBC business editor Robert Peston said Mr Richards feared the bank's assets would command a low price at present.
The bank's preferred route out of the current situation is to sell itself off in whole or in pieces to other banks or financial institutions.
'Clout''Clout'
Robert Peston, BBC business editor, said: "Almost any rescue of the Rock would require shareholder approval, so RAB - one of London's leading hedge funds - has clout. The board of Northern Rock is continuing to assess a total of 10 bids for the bank.
Mr Richards is potentially at odds with the Treasury, whose first priority is to secure repayment of around £25bn of taxpayer-backed loans to the Rock, says Robert Peston. RAB Capital - which controls almost 7% of the bank - would like any sell-off of assets valued at 5% or more to be voted on by all shareholders.
RAB Capital - which controls almost 7% of the bank - would like any sell-off of assets valued at 5% or more to be voted on by all shareholders, he also says. Mr Richards said: "We would vote against any offer which seeks to wipe shareholders out or nearly wipe shareholders out, particularly when we know that there are two good offers out there which could lead to a complete rebuilding of value for all shareholders."
The bank's preferred route out of the current situation is to sell itself off whole or in pieces to other banks or financial institutions.
Robert Peston, BBC business editor, said: "Almost any rescue of the Rock would require shareholder approval, so RAB - one of London's leading hedge funds - has clout."
He added that Mr Richards was potentially at odds with the Treasury, whose first priority is to secure repayment of around £25bn of taxpayer-backed loans to the Rock.
'A good business'
Mr Richards also said he believed Northern Rock was fundamentally a good business.
"The money that they've lent out is basically a good quality mortgage book.
"The only problem they have had is on the funding side and that they have not been able to replace the short term funding which they've needed to replace.
"We believe that's been caused by the way the Bank of England handled the interbank market after the crisis broke in the summer."