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| Shareholders to grill Rock board | Shareholders to grill Rock board |
| (10 minutes later) | |
| Northern Rock is set to face a fight with shareholders over its future at a key meeting later. | Northern Rock is set to face a fight with shareholders over its future at a key meeting later. |
| At the emergency meeting in Newcastle, investors will get their first chance to grill management since the bank ran into trouble last September. | |
| They are expected to demand a bigger say in the bank's sale process. | They are expected to demand a bigger say in the bank's sale process. |
| But analysts have warned that if they succeed, the lender is certain to be nationalised, leaving investors with little or nothing for their shares. | But analysts have warned that if they succeed, the lender is certain to be nationalised, leaving investors with little or nothing for their shares. |
| Northern Rock's share price has already fallen from more than £12 in February last year to 82.5 pence after the Newcastle-based bank became Britain's most high-profile casualty of the global credit crisis. | Northern Rock's share price has already fallen from more than £12 in February last year to 82.5 pence after the Newcastle-based bank became Britain's most high-profile casualty of the global credit crisis. |
| Rescue deal | Rescue deal |
| Speculation that Northern Rock is about to be nationalised has intensified since the weekend. | Speculation that Northern Rock is about to be nationalised has intensified since the weekend. |
| It emerged that the Treasury had put together a fully developed plan to own and manage the bank, should a rescue deal with a private buyer prove impossible. | It emerged that the Treasury had put together a fully developed plan to own and manage the bank, should a rescue deal with a private buyer prove impossible. |
| This includes lining up the businessman credited with turning around the fortunes of the Lloyd's of London insurance market, Ron Sandler, to take charge in the post of executive chairman. | This includes lining up the businessman credited with turning around the fortunes of the Lloyd's of London insurance market, Ron Sandler, to take charge in the post of executive chairman. |
| I sit and re-read the letters from the bank and the hedge funds, but really there is no conclusion Sylvia Murphy, Northern Rock shareholder Shareholders give their views | I sit and re-read the letters from the bank and the hedge funds, but really there is no conclusion Sylvia Murphy, Northern Rock shareholder Shareholders give their views |
| These developments come as thousands of investors in Northern Rock prepare to vote on resolutions to restrict the bank's ability to sell the company's assets or issue new shares. | These developments come as thousands of investors in Northern Rock prepare to vote on resolutions to restrict the bank's ability to sell the company's assets or issue new shares. |
| These proposals were put forward by Northern Rock's two biggest shareholders, hedge funds RAB Capital and SRM Global, which together own about 18% of the bank, to prevent its assets being sold off on the cheap. | These proposals were put forward by Northern Rock's two biggest shareholders, hedge funds RAB Capital and SRM Global, which together own about 18% of the bank, to prevent its assets being sold off on the cheap. |
| They say shareholders should have the power to block any moves to sell more than 5% of Northern Rock's assets, issue large chunks of new shares, or buy any assets. | They say shareholders should have the power to block any moves to sell more than 5% of Northern Rock's assets, issue large chunks of new shares, or buy any assets. |
| Northern Rock's management and analysts have urged shareholders to vote against these proposals, saying they could endanger any possible commercial solution. | Northern Rock's management and analysts have urged shareholders to vote against these proposals, saying they could endanger any possible commercial solution. |
| David Greene, head of litigation at law firm Edwin Coe and a representative for the bank's small shareholders told the BBC that he didn't believe a vote in support of the proposal would make nationalisation any more or less likely. | David Greene, head of litigation at law firm Edwin Coe and a representative for the bank's small shareholders told the BBC that he didn't believe a vote in support of the proposal would make nationalisation any more or less likely. |
| "The question that's being addressed today is, how do shareholders control these quite extraordinary circumstances," said Mr Greene. | "The question that's being addressed today is, how do shareholders control these quite extraordinary circumstances," said Mr Greene. |
| Northern Rock has named Sir Richard Branson's Virgin Group as preferred bidder for the bank, but it remains in talks with investment firm Olivant about a rival proposal. | Northern Rock has named Sir Richard Branson's Virgin Group as preferred bidder for the bank, but it remains in talks with investment firm Olivant about a rival proposal. |
| Confusion | Confusion |
| Many of the bank's 180,000 shareholders were awarded their shares when Northern Rock demutualised 10 years ago. | Many of the bank's 180,000 shareholders were awarded their shares when Northern Rock demutualised 10 years ago. |
| Some say they are confused about the right course of action. | Some say they are confused about the right course of action. |
| One shareholder, Sylvia Murphy from Cramlington, said: "If you vote for Northern Rock, can you trust the management to do the right thing? But if you vote with SRM and RAB, will they do the right thing?" | One shareholder, Sylvia Murphy from Cramlington, said: "If you vote for Northern Rock, can you trust the management to do the right thing? But if you vote with SRM and RAB, will they do the right thing?" |
| The debacle is set to blow out of the water a resonant manifestation of Gordon Brown's financial prudence, the sustainable investment rule Business editor Robert Peston Peston's blog: The breaking of Mr Brown's fiscal rule | The debacle is set to blow out of the water a resonant manifestation of Gordon Brown's financial prudence, the sustainable investment rule Business editor Robert Peston Peston's blog: The breaking of Mr Brown's fiscal rule |
| Armand Borisewitz and his wife, from Aberdeen, obtained 500 shares each when the company demutualised and at one point they were worth £12,000. At Northern Rock's current share price, they would be worth £825. | Armand Borisewitz and his wife, from Aberdeen, obtained 500 shares each when the company demutualised and at one point they were worth £12,000. At Northern Rock's current share price, they would be worth £825. |
| He believes a class-action should be brought against Northern Rock's previous management, but as for the future direction of the company, he "hasn't got a clue". | He believes a class-action should be brought against Northern Rock's previous management, but as for the future direction of the company, he "hasn't got a clue". |
| Northern Rock was forced to go to the Bank of England for a lifeline last September, when it was unable to raise the required funds to run its mortgage business from the jammed up money markets. | Northern Rock was forced to go to the Bank of England for a lifeline last September, when it was unable to raise the required funds to run its mortgage business from the jammed up money markets. |
| Repercussions | Repercussions |
| It has been given about £26bn of Bank of England emergency loans, but with government guarantees to savers and other lenders, the total aid package underwritten by the taxpayer comes to more than double that. | It has been given about £26bn of Bank of England emergency loans, but with government guarantees to savers and other lenders, the total aid package underwritten by the taxpayer comes to more than double that. |
| This could have severe political repercussions for Prime Minister Gordon Brown, whose reputation as chancellor was defined by his supposed adherence to financial prudence, says BBC business editor Robert Peston. | This could have severe political repercussions for Prime Minister Gordon Brown, whose reputation as chancellor was defined by his supposed adherence to financial prudence, says BBC business editor Robert Peston. |
| He argues that whether or not Northern Rock is nationalised, the government will be forced to include a large portion of the bank's balance sheet into its public sector accounts, breaching the prime minister's sustainable investment rule. | He argues that whether or not Northern Rock is nationalised, the government will be forced to include a large portion of the bank's balance sheet into its public sector accounts, breaching the prime minister's sustainable investment rule. |
| "It would be a big stick for the opposition to use in beating up Brown and the Treasury," Mr Peston said. | |
| "But it shouldn't affect taxation and spending policy". | "But it shouldn't affect taxation and spending policy". |