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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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I wish to complain. I bet £4.00 in Ladbrokes last Saturday and lost. What does the government intend to do about it? Will David cameron raise the issue in the house of commons for me?. Why didn't Darling intervene and stop me? I don't see why my being an incompetent avaricious gambler should absolve the Labour party of total responsibility for my actions.
Brown must go to the country tommorow. He has betrayed me.
e skelton, cardiff, uk
What a bunch of idiots this government has proved itself to be. The reality is that any trade buyer could clear the debt owed to the government in 1-2 years, without sacrificing shareholder returns of around 400p per share. The loan book is high quality, with strong credit scoring and attractive margins. The only real downside is the employees. A realistic buyer would slash the workforce immediately, closing many branches and losing the broker division, which is massively expensive now that it is doing no business. Our Labour government doesn't countenance the word redundancy however and therefore carries on in cloud cuckoo land. Just to start the ball rolling I offer to buy the Equity Release Mortgage book at par value - that should free up a couple of billion without trying.
Simon Kershaw, West Kirby, England
The Government has guaranteed savers deposits in all the other high street banks, up to a certain level amounting to many billions more than Northern Rock.NR pays interest on the money it has borrowed from the BOE to fund new mortgages so it hasnt really cost the taxpayer anything.The large shareholders are prepared to put new money into the Company but if it was nationalised all costs would have be born by the taxpayer,if the Government intended to carry on the business during the credit crisis they would still have to inject a lot of taxpayers money.Nationalisation would be disaster all round and would probably lead to the Labour party losing the next election.
roger allan, cranleigh, surrey
a good bank need support ,they have sthength for so many years successful management,and it have rich experience.It is temporary,will back to normal.
Sandy, xiamen,
If the large invions to be knownestors of Northern Rock wish for their opinions to be known, and they think it is valued, then perhaps they could stunp up their share of the £25 Billion that the Taxpayer is currently keeping them afloat with!
Dominic Tattersall, Burnley, England
'Also, Eric Campbell, the vast majority of shareholders by number are small-timers, most of whom paid for their shares, and who may well be NR employees and / or NR savers too. To portray them as an entirely separate and greedy interest group is just old style class war dogma that gets the debate no further'.
The vast majority of shareholders are depositors and motgage holders who received their shares free, as did those in Halifax, Abbey, Woolwich et al when Building Societies became Banks. I am not portraying them as a greedy interest groups I am portraying them as what they are - lucky recipients of a hand-out. I am not portraying a class war - I am simply saying that they cannot lose what they did not possess - and if they do lose a paper profit, which in the case of Northern Rock was always exactly that, paper only, then there is no reason why I, a taxpayer, should pay them out. Their shares were never worth anything except in the cooked books of a failed enterprise. Tough.
eric campbell, harrogate, uk
Our understanding of the Northern Rock crisis is bedevilled by both government and media misinformation, which can only provoke anger and confusion amongst the public. This very article tells us that it owes 50 billions, then just 26 billions a couple of paragraphs later. One of these "facts" must be wrong.
Until journalists can get their heads round the no doubt complex financial background and check their "facts" before hitting their keyboards they should stop just gossiping and shut up.
Also, Eric Campbell, the vast majority of shareholders by number are small-timers, most of whom paid for their shares, and who may well be NR employees and / or NR savers too. To portray them as an entirely separate and greedy interest group is just old style class war dogma that gets the debate no further.
Gordon Alexander, Frome, UK
"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."
I can't believe it - someone at Northern Rock is finally speaking sense and realising that the rest of us taxpayers do not exist solely to prop up their ailing business. Now if only the idiot shareholders who insist on some imagined 'fair value' for their shares would listen to the Board's advice...
MB , Edinburgh,
There is a lot of talk of nationalisation.
Why is there no talk of administration?
Take the bank into Administration and put it out of its misery, say I.
That's the way capitalism is supposed to work isn't it?
rajeev shah, london,
Banking is about borrowing long and lending short.
Building societies are institutions that take depositers deposits and, conservatively, lend them to home-buyers.
Northern Rock was an investment speculator that used its position, ostensibly as a bank/building society, to actually speculate on financial packages. The Regulators knew what the management were doing and allowed it to operate accordingly. They are responsible, should pay compensation, be sacked and prosecuted.
F. Roseman, London, England
Those little shareholders should have been more careful. I'm a middle class small very limited share investor , and I have never even looked at Northern Rock as a share investment despite all the returns and boasts, because it has clearly and blindlingly obviously been a house of cards for many, many years. If someone greedily looks to investing in Nut, Scam and Co PLC , they can hardly cry when it all goes south, and to say "I'm Old , the taxpayer should bail me out for my stupidity and greed" is just too much . They've invested in a failed incompetent business and should take the conserquences of the losses as well as the gains.
Roarke, Wembley, London
This bank has been nationalised, end of story, or our money back now!
Taxpayer's hard earned money should not be used to prop up incompetent or badly run banks, or for that matter, any other PRIVATE enterprise that fails. Investment is gambling, sometimes you win, sometimes you lose.
At what rate of interest has our money been loaned? and who exactly is responsible?
Clive Burghard , LANCING, England
Almost all the shareholders at todays meeting will have got their shares free. The minority who bought theirs took the same risk as anyone buying any shares. Neither group should have our money, or our sympathy. One has made a profit, whatever the shares drop to. The other made a bad buy and must live with it. The general public is not responsible. The government should not have risked our money.
eric campbell, harrogate, uk
It was stupid to support this sinking ship which should have been allowed to go under, the taxpayer would now still have the £50billion to help us through the recession now well and truly under way. This country has little in reserves thanks to that clown Brown. Helping out these lame ducks who borrowed money to fuel growth with scant regard for any economic downturn is not what I pay my taxes for. Northern Rock had it coming to them as will happen to Brown as the real 'you know what' hits the fan.
Good bye Mr Bean!
D Case, Newquay,