Northern Rock boss accused

Bryan Sanderson, Chairman of Northern Rock, has been slammed by its biggest shareholder of ‘not knowing what he is talking about’ and of ’scaring people’ into accepting a takeover by Sir Richard Branson’s Virgin Group.

The tirade came from Jon Wood, SRM hedge fund boss, who owns 9.1% of the bank. Together with RAB Capital, another hedge fund, Mr Wood could oppose any takeover bid. Both hedge funds are in favour of an alternative offer being put forward by private equity group Olivant, run by Luqman Arnold, the City stalwart and former Abbey chief executive.

Shareholders have also criticised the choice of Virgin Money boss Jayne-Anne Gadhia to run Northern Rock after a takeover.

Furthermore the two hedge funds are trying to block the Virgin takeover because the proposal is likely to leave shareholders with virtually nothing.

Mr Sanderson this week said that the imminent threat of the bank’s collapse means priorities have changed and that the board must now put the interests of taxpayers ahead of investors. However, Mr Wood said that the bank is absolutely, categorically not in, or even near to, a state of liquidation.

Mr Wood added that Sanderson made the comments to try and scare people into accepting the Virgin bid and that he doesn’t know what he is talking about.

Virgin Group is pledging to pay back £11 billion of the taxpayer backed Hedge fund loan to the Bank of England immediately, with the balance being repaid over the next 3 years.

If a deal is not reached, the bank could be placed into administration or nationalised.

Discuss this in the Finance Markets forums

Story link: Northern Rock boss accused