THE Treasury is close to appointing an adviser to value the shares of Northern Rock, the bank that was nationalised by the government this year. The firm chosen by the Treasury will be expected to decide how much compensation is owed to 180,000 shareholders, including several powerful hedge funds.

A short list of three firms has been drawn up by the government — they are Houlihan Lokey, BDO Stoy Hayward and LEK Consulting. The favourite is Houlihan Lokey, the American investment bank, and it is thought an appointment could be made in the next few weeks.

The “big four” accountancy firms — Deloitte, Ernst & Young, KPMG and Price Waterhouse Coopers — are not being used because of potential conflicts of interest from their frequent work in the public sector.

Northern Rock shares were trading at 90p when they were suspended on February 22, giving the bank a value of £380m. However, most analysts expect little or nothing to be paid for the shares. The government has said that whoever gets the advisory role “must assume that the company is unable to continue as a going concern”.

If shareholders fail to get their money back, some of them are likely to start legal action — especially the hedge funds SRM Global and RAB Capital, which owned 20% of the shares and together lost £170m. Jon Wood, head of SRM, claims that the book price of the shares was 425p each.

Of the advisory role, one banker said: “It’s a pretty thankless task. Many people don’t want to touch it. You could have angry shareholders parked on your lawn for years.”

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