COMPENSATION terms for investors in nationalised bank Northern Rock were "deliberately rigged" by the UK government, a group of investors said yesterday as they started legal action for a review of the terms.
The UK Shareholders Association (UKSA) said lawyers were to file an application for a judicial review of the compensation terms offered by the government to thousands of former shareholders of Northern Rock.
UKSA said hedge fund SRM, which was Nor
thern Rock's biggest shareholder with a 12 per cent stake, will file a similar application.
The terms for compensation should be set by an independent expert, UKSA added.
"The government seems to have determined that it wishes to pay nothing and has set totally artificial terms of reference," it said in a statement.
Britain's government has said compensation for about 180,000 shareholders will be set by an independent valuer named by the Treasury, who "must assume that the company is unable to continue as a going concern".
That is expected to mean little or nothing is paid for the shares. "In essence, our legal advice is that the government's actions are disproportionate and basically unfair. Hence they are a breach of both established UK legal precedents and European law on human rights," UKSA said.
Northern Rock, Britain's fifth-biggest mortgage lender, was forced to seek emergency loans from the Bank of England in September after a funding crisis, prompting the first run on the deposits of a major UK bank for 140 years and its near-collapse.
SRM and fellow hedge fund RAB Capital had called the government's nationalisation proposals deeply unfair to shareholders in the bank.
The full article contains 276 words and appears in The Scotsman newspaper.
