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Rock nationalisation 'right move' Rock nationalisation 'right move'
(10 minutes later)
The Prime Minister Gordon Brown has been defending the government's decision to nationalise Northern Rock.The Prime Minister Gordon Brown has been defending the government's decision to nationalise Northern Rock.
At a Downing Street briefing he called it "the right move at the right time for the right reasons".At a Downing Street briefing he called it "the right move at the right time for the right reasons".
The government's move has been fiercely criticised by shareholders who face losing almost all their investment.The government's move has been fiercely criticised by shareholders who face losing almost all their investment.
Shadow chancellor George Osborne said the nationalisation plans were "catastrophic," and that they would be opposed by the Conservatives.Shadow chancellor George Osborne said the nationalisation plans were "catastrophic," and that they would be opposed by the Conservatives.
The prime minister said that the government had considered two offers from private sector buyers for Northern Rock, but decided not to accept them.
"We will have and always will put the interests of taxpayers first," he said.
Chancellor Alistair Darling said two private takeover offers did not offer the taxpayer "sufficient value for money".Chancellor Alistair Darling said two private takeover offers did not offer the taxpayer "sufficient value for money".
I'm absolutely devastated...this was a vibrant successful ethical bank...I was proud to work there. Mark, Newcastle Is Darling still in control?In quotes: Reaction to move
"We had independent advisers look at this, and they all pointed in one direction: the best thing to do was to take the bank into a period of temporary public ownership before ultimately trying to return it to the private sector," he told the BBC.
Emergency legislation is to be introduced to temporarily nationalise the stricken Northern Rock bank.Emergency legislation is to be introduced to temporarily nationalise the stricken Northern Rock bank.
Trading in Northern Rock shares has been suspended.Trading in Northern Rock shares has been suspended.
Under nationalisation rules, Northern Rock's shareholders will be offered compensation for their holding at a level set by a government-appointed panel.
The calculation will be based on the bank's value without government guarantees.
However, analysts say under those conditions shareholders will receive very little.
It seems likely that shareholder groups will take legal action over the government's move.
Roger Lawson, chairman of the Northern Rock Shareholders' Action Group said he thought there were "good grounds" for legal action.
"We've already considered it and obviously SRM - who are one of the major institutional shareholders - have effectively promised legal action already if nationalisation went ahead," Mr Lawson said.
A consortium led by the Virgin group had put forward a rescue proposal for the beleaguered bank, and a plan from management had also been considered.