Northern Rock meeting set to be heated

by Richard Kilner

Story link: Northern Rock meeting set to be heated

The general meeting of struggling bank Northern Rock and its shareholders may be even more heated than expected.

RAB Capital, a hedge fund and the second largest shareholder in the bank, has said it may have a public confrontation with the bank when the two come face to face on 15 January.

Other shareholders in the stricken bank have received letters from RAB Capital, calling on them to support its proposals which include shareholder approval for sales of assets of more than 5%.

Philip Richards, chief executive of the hedge fund, has said he may challenge the board of Northern Rock publicly at the general meeting.

Richards said, in the letter sent to other investors, that the political situation was overshadowing the fact that the bank remained owned by shareholders, and that the stakeholders were being ignored.

Northern Rock’s crisis was caused by the credit crunch which saw the bank borrowing tens of billions from the Bank of England in order not to go under.

The government and the bank’s board have been keen for a private bidder to purchase the bank, with two bids remaining (Virgin and Olivant).

However, the two largest shareholders (SRM Global, another hedge fund, and RAB Capital) have both been sceptical of the Virgin bid which was named as the board’s preferred option. Both hedge funds have expressed concern that political considerations are overriding the rights of shareholders.