Northern Rock Investors to Receive No Compensation

According to the first public statement made by an independent valuer of BDO Stoy Hayward – UK division of BDO International, one of the largest accountancy firms in the world – Northern Rock’s shareholders, whose holdings were lost as a result of the bank’s nationalisation, will receive no compensation.
The statement was made by Mr. Andrew Caldwell, who also invited to hold further consultation in order to give a final ruling in 2010.
However, even the first statement made by Mr. Caldwell caused negative reaction of Northern Rock’s shareholders; the anger was led by Mr. Jon Wood, who expected to receive a min. of £4 per share.
Let us remind that earlier this year Mr. Wood already tried to launch legal actions against the UK Government, however, his attempt proved unsuccessful. The latest claim made by BDO Stoy Hayward’s partner might result in Mr. Jon Wood and several other shareholders taking the case “all the way to the Court of Human Rights in Strasbourg”.
It has also become known that the UK Government plans to inject billions of pounds into the new banks, which will be created in the beginning of 2010 as a result of Northern Rock’s reformation.
Let us remind that on January 1st 2010, Northern Rock will be split into 2 banks, with one of them receiving £10 billion worth of performing mortgages and £19 billion worth of retail deposits (the good bank), while the other will get £50 billion of mortgages (the bad bank).
As much as £1.6 billion and £1.4 billion are expected to be injected into the bad and the good banks respectively. In addition to this, the Government will increase its loan to the bank to £23 billion, up from £15 billion.
Another advantage that the state-backed Northern Rock currently enjoys – a 100% guarantee on deposits – is expected to last ‘till April 2010.