Northern Rock shareholders begin court challenge

  • Story by: Sharon Flaherty
  • Magazine: FTAdviser
  • Published Thursday , May 08, 2008

Northern Rock shareholders are to launch a court challenge later today, in a bid to win compensation as a result of the nationalisation of the bank.

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The UK Shareholders Association (UKSA) is expected by the end of today (Thursday 8 May) to submit an application for a judicial review to question the terms under which the bank was nationalised. (Read previous article.)

As it stands, the estimated 150,000 private Northern Rock shareholders are set to walk away with nothing after the government saved the bank from near collapse.

Whether or not the case will get to the administrative court will be decided in two to three weeks once the UKSA’s application has been considered.

However, Roger Lawson, chairman of the UKSA, said he is quietly confident.

"We are sure that it will pass this stage," he said.

If the application is accepted, it would then go to a full hearing at the administrative court, which could take eight to nine months to begin.

If the UKSA wins the matter, shareholders would look to get what they would have received if a private bidder had rescued the bank rather than the government.

That being the case, Lawson hopes that shareholders could receive between £3 and £5 per share.