Read the resolutions for today's EGM in full

Northern Rock: the story so far

Northern Rock's two largest shareholders today failed to win support for a number of proposals that would have given investors the right to approve the sale of the troubled bank's assets.

Shares in Northern Rock plunged 18 per cent to new-lows of 67.5p when shareholders backed the board on all but one of the nine resolutions put to a ballot at today’s Extraordinary General Meeting (EGM).

SRM and RAB Capital, who collectively own 18 per cent stake in Northern Rock, put forward four resolutions which, if they had been voted through, would have handed power to Northern Rock shareholders to stop the sale the bank's assets.

The only proposal to gain backing at the EGM today means Northern Rock must seek approval before raising £5 million or more in shares.

Northern Rock's chairman, Bryan Sanderson, warned investors they would be playing "Russian roulette" if they voted in favour of proposals. The bank is still hoping an agreement with a private company can be reached, with Virgin Money and a consortium called Olivant vying to buy Northern Rock.

However, with doubts growing over private funding for a deal for the bank, which owes the UK taxpayer around £50 billion, Northern Rock is fast approaching the prospect of nationalisation.

Mr Sanderson attempted to reassure investors that Northern Rock still has a viable future and could be set "on the road to recovery". He added that Northern Rock was on schedule to announce the outcome of its strategic review, started when the business ran in to trouble in September, in mid-February.

However, Mr Sanderson warned investors that there was no guarantee that the Treasury and its tripartite partners, the Financial Services Authority and the Bank of England would agree to the Rock's board's plans to save the bank.

Shareholders fear that the board will be pressured by the Treasury into conducting a fire sale or allowing a bidder to buy cut-price shares in the company, in order to quickly pay off an estimated £26 billion that the bank owes to the Bank of England.

Mr Sanderson told this morning's meeting that, although some shareholders wanted the board to "call the Government's bluff" and insist that any decision on the future of the bank must protect the value of shareholders' investments, such a move would be too risky.

"A high stakes poker game wouldn't be a proper discharge of the directors' duties," Mr Sanderson said. "Shareholders have no right to expect them [the Government] to put the taxpayers' and consumers' interests behind those of shareholders."

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