Northern Rock shareholders lose court battle for compensation
Former shareholders of Northern Rock have failed in their legal challenge to the Government’s plan to compensate them.
Rock’s biggest former investor SRM Global brought the case against the Government, with RAB Capital and 150,000 private investors. The case entered the High Court in January and shareholders were contesting the way in which the bank’s finances were assessed and the way the crisis-torn bank was nationalised in February 2007.
The UK Shareholders Association (UKSA), who acted on behalf of Northern Rock’s shareholders, said that the UK Government confiscated the shares even though there was a good private sector solution on the table which would have enabled Northern Rock to continue as a viable company.
The UKSA has always been of the view that nationalising Northern Rock was unnecessary.
However, in a statement, Lord Justice Stanley Burnton, one of the two judges hearing the judicial review, said “We have come to the conclusion that the provisions made for the compensation of the shareholders of Northern Rock do not infringe their rights.
Northern Rock collapsed at the onset of the credit crunch in autumn 2007 after savers staged a nationwide run on the bank.