Date set for Rock shares hearing

Aug 4 2008 by Karen Dent, The Journal

NORTHERN Rock shareholders’ pressure for a judicial review into the way the bank was nationalised has finally borne fruit.

A date, reported to be January 12 next year, has been set for the court hearing after the Government’s lawyers filed their defence, rejecting the shareholders’ compensation claims.

“We have seen a response from the Government but it doesn’t add anything new. The Government is still saying in their view, it would have gone bust if they had not put anything in,” said Roger Lawson, chairman of the Northern Rock Shareholders’ Action Group, part of the UK Shareholders Association.

A valuation scheme has been set up to consider how much compensation Rock shareholders should receive following the bank’s nationalisation. However, this scheme has also been beset by friction, with claims from hedge funds that its terms are illegal because they say the value must assume the bank was effectively in administration when it was nationalised.

“That’s rather like a lender that lends you 25% of the value of your house then says that because I’ve lent you the money for this house, I can take it off you whenever I want and not pay you anything for it,” said Mr Lawson. “That is nonsense.”

Newcastle-based Northern Rock last week confirmed 1,300 staff would lose their jobs, with 800 compulsory redundancies.