Hedge funds SRM Global and RAB Capital, two of Northern Rock’s largest shareholders that together control almost 20 per cent of the stock, forced the general meeting and have urged shareholders in open letters to vote to gain more control and consultation on the beleaguered bank’s sale.
AP2, Northern Rock’s sixth largest shareholder, has also thrown its weight behind the move.
The proposed resolutions would require Northern Rock’s directors to seek shareholders’ approval before they sold any of the group’s assets worth more than 5 per cent of the total.
However, Northern Rock’s chairman, Bryan Sanderson, warned shareholders against the move, stating that the resolutions were ‘unnecessary’ and could be ‘potentially damaging’. He added that such a change would limit the board’s ability to move swiftly at a time when flexibility was needed.
There have been further concerns that any deal could be scuppered by the slowing house market devaluing Northern Rock’s substantial mortgage book.
The government is reportedly rushing to find a private sector solution ahead of the meeting to avoid nationalising Northern Rock – a move that would leave shareholders with little or no return on their investment.
Jonathan Cornell, managing director of Hamptons International Mortgages, said: “It’s entirely right that shareholders are consulted in the sales process. Northern Rock is owned by its shareholders, but because the company they own is funded by the Bank of England, it throws a spanner in the works. While I hate the idea of nationalisation, if the government wants to dig its way out, it’s the simplest situation. Neither of the offers will give shareholders a good return.”
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