Northern Rock's shareholders are considering taking legal action against the Government over the nationalisation of the bank.
The UK Shareholders Association (UKSA), which is representing many of Northern Rock’s shareholders, says it does not believe the Government’s proposed valuation procedure is fair and unbiased.
The UKSA says the Treasury’s draft Northern Rock Compensation Scheme Order 2008 requires a valuer to assume the bank is “unable to continue as a going concern and is in administration".
Roger Lawson, communications director at the UKSA, says: “In our view it is grossly unethical to set the terms of reference in this way when clearly the company is not in administration and is a going concern. It would not be a going concern if the Government had demanded repayment of its loans but it has not done so and is unlikely to do so.”
The association goes on to claim the Government’s mismanagement of the crisis, with continued threats of nationalisation of forced disposal, have eroded the share value and will leave shareholders with almost nothing.
The UKSA has suggested using a team of four independent valuers that cannot be dictated to by the Government.
Two Valuers would be appointed by the Institute of Chartered Accountatns, while the Bar Council and Chartered Institute of Bankers would supply one each under the UKSA’s proposals.
Lawson also says the UKSA is looking into pursuing legal action under the European Convention on Human Rights and other possible legal issues and also indicated that major shareholders, such as SRM Global, are also considering legal action.
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