Northern Rock shareholder threatens legal action
One of Northern Rock’s biggest shareholders has threatened to commence legal action against the crisis-torn bank.
A law suit, which could name Chancellor Alistair Darling and Bank of England Governor Mervyn King, would be a major headache for Mr Darling just a week before his first budget on 12 March.
Jon Wood, the fund-manager behind SRM Global with a 12% stake in Northern Rock, said we are expecting to file legal action by the end of the week. We haven’t decided whether to name individuals though we certainly plan to call them as witnesses.
The Chancellor was hoping to re-establish his credibility following the controversial decision to nationalise the stricken bank.
Mr Wood is launches his attack against the government, regulators and the individuals he accuses of ‘commercial vandalism’ over the bank’s demise.
SRM, together with RAB Capital, the bank’s two largest shareholders, face combined losses of approximately £170 million following the nationalisation.
After rejecting takeover bids from the board of Northern Rock and a consortium led by Sir Richard Branson’s Virgin Group, the Government rushed through legislation to nationalise Northern Rock last month.
Former Lloyds of London boss, Ron Sandler, is currently in charge. Mr Sandler and the rest of the team are involved in a plan to revive the struggling bank.