Received from Radio Four's "Moneybox" programme:
'Moneybox', Radio Four's personal finance programme, is planning an edition of the programme - on Saturday September 13th - looking at the financial impact of the troubles at Northern Rock a year on in Newcastle - to its shareholders, mortgage holders, savers, and of course, its employees.
I'm particularly keen to talk to shareholders who may have savings with the bank or mortgages. Then if you are happy to be interviewed you can e mail me directly.
Reporter Bob Howard will be free for a few days the week leading up to the programme (ie 10-13 sept) to meet people in the Newcastle area to pre-record interviews.
Lesley McAlpine, senior producer, Moneybox, Radio Four.
lesley.mcalpine.01@bbc.co.uk
Wednesday 30 July 2008
Tuesday 29 July 2008
Northern Rock Shareholders Action Group – Update No. 40
Meetings Report – Jon Wood Accuses the Government of “Theft”
We held meetings for our supporters in Newcastle and London recently. About 200 people attended the meeting in Newcastle and 100 in London which may be disappointing to some but not unexpected bearing in mind the average age of Northern Rock shareholders and their reluctance to travel far, the holiday season, and other factors. Also we were not announcing anything particularly new at these meetings, so they were primarily an opportunity for shareholders to ask questions and hear what we had been doing and why. This was particularly helpful to those who do not get our regular email updates.
Incidentally we received a number of requests for meetings in other parts of the country (eg. Scotland, the West of England, etc). It is beyond our limited resources in time and money to organise local meetings everywhere, but if any enthusiastic supporters wish to arrange such meetings then we would be supportive and would try to provide a speaker.
Jon Wood of SRM Global spoke succinctly at the Newcastle meeting and repeated what he had said to the local press – namely that MPs were guilty of backing the “theft” of the company from shareholders. In his view they had ruined the lives of thousands of honest innocent people as a result. He made these comments after meeting a number of particularly disadvantaged shareholders earlier in the day, whose plight had clearly moved him.
In response, Nick Brown M.P. Minister for the North East said that such remarks were “unacceptable”. He also said “the bank was brought to the brink of ruin by greed and the use of unacceptable risk taking”. But this is not the view of our supporters based on a survey taken of shareholders who clearly now blame the Government primarily for the sequence of events.
Subsequently Jon Wood said to the Sunday Telegraph “Does Nick Brown realise that Northern Rock did not break any rules so that all the risk taking at the bank was approved by his boss Gordon Brown, the tripartite and the Basel II regulations? The bank was suffering from a liquidity crisis, it was not losing money. It’s the same problem that all the banks have run into. And if that was unacceptable risk-taking then why has the Government allowed them to tap into the special loan facility to the tune of £100bn?” He added “How much longer do we have to keep being told how the mess created by Gordon Brown is everybody else’s fault?”
Other speakers at the meeting were Chris Hulme, who gave the views of a mortgage broker, Dennis Grainger, a former Northern Rock employee who organised the meeting, Doreen & Dennis Shannon, Alan Appleby, Brian Peart, Steve Wilkinson and other former shareholders.
Roger Lawson, Chairman of the Action Group, spoke and he backed up what Jon Wood had to say regarding the causes of the crisis at Northern Rock, and the ethics of what the Government had done. The content of his presentation can be seen at: www.uksa.org.uk/UKSA_Northern_Rock_2.pdf .
One question that came up at the meeting was about the Government’s claim that shareholders should not be compensated, because without Government support the company would have had to cease trading. This was countered by the following arguments:
1. The Government lent money to the company on a commercial basis and was also paid for the guarantees provided by the Government to depositors. The company always adhered to the terms of the Government loans and as far as we know paid interest when it became due – indeed they had commenced repaying the loans before nationalization took place. These loans were not exceptional, they were provided under “Lender of Last Resort” facilities from the Bank of England which Northern Rock qualified for as would any other solvent bank.
2. The Government was a minority lender to the company in terms of its total liabilities. An analogy to the Government’s claim to be able to acquire the company for nothing is where someone who granted you a mortgage on 25% of the value of your house, suddenly decided, when you had not defaulted in any regard, that this gave them the right to acquire the property and pay you nothing. That is what shareholders are being asked to accept.
In London, the main speaker was Roger Lawson, and similar questions on the whole arose from the audience. One issue that came up though was whether shareholders would like to have the company returned to them after the “period of temporary public ownership”. On a show of hands, the general view appeared to be “yes”, but it was pointed out that shareholders may not want it back because of the damage now being caused to the company by the management now in place. The size and value of the business was going to be much reduced as a result from what it might have been, or what it was at the date of nationalization.
Some photographs taken at the two meetings have been added to this page of our web site: www.uksa.org.uk/NorthernRockPhotos.htm . Our thanks go to Newcastle City Council for providing the venue in Newcastle free of charge.
The Role of Lender of Last Resort
An interesting light on the role of the Bank of England in the crisis of Northern Rock was given by a lengthy article in “FT Weekend” on the 19th July. This was a report on a lecture by Richard Lambert, Director General of the CBI, at Templeton College, Oxford. It included this comment:
“The role of lender of last resort was classically defined by Walter Bagehot. His great book Lombard Street was published in 1873, and set out what has become the guiding mantra for central banks in times of crisis ever since: lend freely at high rates against good collateral. Lend freely, in his words ‘to stay the panic’. At high rates, so that 'no one may borrow out of idle precaution without paying well for it'. And lend on all good banking securities to an unlimited extent – because the ‘way to cause alarm is to refuse someone who has good security to offer’”.
Of course the Bank of England did exactly what is countenanced against in the last sentence when first faced with a request for support from Northern Rock. One wonders if Mervyn King, the Governor, had ever read this tome.
Tax Position
Shareholders have been wondering as to whether the nationalization of Northern Rock qualifies as a disposal of the shares and if so, at what value. HM Revenue and Customs have recently published a note that spells out the position – see the following web page: www.hmrc.gov.uk/briefs/vat/brief3208.htm .
In essence they have accepted that the shares will be of nil value at the date of nationalization, which rather supports our argument that this is the only answer any independent valuer can come up with if they follow the Governments terms of reference in the Act and the Compensation Order. So shareholders can recognize a full loss on the shares for capital gains tax purposes. Those shareholders who obtained the shares for nothing in the original demutualization will likewise have no profit to declare.
New CEO at Northern Rock
Northern Rock have announced the appointment of a new Chief Executive. His name is Gary Hoffman who comes from Barclays. Andy Kuipers, the last of the original board still present, will be leaving and Ron Sandler will change his role to that of “non-executive” Chairman.
Why Has the Government Not Informed Shareholders of Nationalisation?
Many shareholders have asked if they have missed out on any communications from the company or the Government about the confiscation of their shares, and what is happening re the independent valuation process. No you have not. Surprisingly nobody, other than UKSA, has told shareholders, even those on the share register, that their shares have been confiscated. Although this is something the independent valuer is lined up to do, it is clearly going to be many months before anything is sent to shareholders. Why the lack of communication? Is the Government simply unwilling to publicise what it has done?
The Source of the Leak that Caused the Run on the Bank
Mervyn King, Governor of the Bank of England, was tackled by Jim Cousins M.P. at the 22nd July meeting of the Treasury Select Committee on the subject of the source of the leak of funding to Northern Rock that was dramatically promoted by the BBC and instigated the run on the bank. Cousins suggested that an inquiry into the leak would be a good idea. Mr King responded that he did not think any leak inquiry has ever produced a very productive results, and “I think it is pretty clear where leaks tend to come from”. He went on to give an assurance that no leak came from the Bank of England, and that he could not carry out an investigation into a leak from any other authorities. The conclusion one might draw from this banter is that the leak came from the Treasury or associated politicians. We suggest that an inquiry into this critical matter would be a good thing to have however.
The Parallels in the Equitable Life Case
Equitable Life has been in the news recently following the publication of a damning report by the Parliamentary Ombudsman into the crisis at the company some years ago. The business almost collapsed and over a million policyholders lost a substantial proportion of their investment. The Ombudsman, Ann Abraham, attributes much of the blame to faulty regulation of the business by the Government authorities and recommends that the Government establishes a fund to compensate those affected.
The Government has persistently avoided any public inquiry into this affair, and has been trying to pin the blame solely on the former directors. The parallels with Northern Rock are very clear as the FSA has already admitted gross defects in their regulation of the latter company. Any agreement to compensate Equitable Life policyholders would surely set yet another precedent that would point out the moral iniquity of the Government depriving Northern Rock shareholders of their interest in the company without fair compensation.
Roger Lawson
Communications Director, UK Shareholders Association; and
Chairman, Northern Rock Shareholders Action Group
Monday 14 July 2008
Northern Rock Shareholders Action Group – Update No. 39
Reminder re Meetings for Shareholders
We have arranged two meetings for Northern Rock shareholders:
On Thursday the 17th July commencing at 6.30 p.m. at the Banqueting Suite, Newcastle Civic Centre, Barras Bridge, NE99 1RD - next to the Haymarket Metro and Bus Stations. Note that parking is available in the council’s car park in Sandyford Road after 6.0 pm, and in nearby public car parks.
On Saturday the 26th July at 10.30 am at St.Columba’s Church, Pont Street, London, SW1X 0BD. The nearest tube stations are Knightsbridge or Sloane Square which are less than 10 minutes walk away. There is an NCP car park in Cadogan Place, SW1X 9SA, which about 5 minutes away.
All shareholders and media representatives are welcome, but if you plan to attend either venue then please let us know so we can get some idea of likely numbers of attendees (make sure you advise which venue/date). These meetings will contain a briefing and explanation on what we have been doing on your behalf and the status on the legal action. They will also enable you to ask questions of course.
Book Reviews
Two books have been published that cover the events at Northern Rock in the last few weeks. Both books should be readily available from bookshops and are certainly worth reading if you are interested in what happened and why – I could not spot any major inaccuracies in either. Here are some brief reviews:
The Fall of Northern Rock by Brian Walters (ISBN 9781905641802)
This volume was written by a former Northern Rock employee who worked in the Commercial Lending operations in Leeds - so he was not at the centre of affairs but it gives the typical view of an employee as the crisis unfolded. It is a sober account that describes in sufficient detail the events as they occurred and his reactions to them.
He correctly identifies the leak of the Bank of England funding which was publicised by the BBC in a dramatic way as one of the critical factors in the cause in the run on the bank, a factor that the Treasury Select Committee did not look into. The Government has also consistently refused to look into the source of this leak.
But the author misses the significance of the EGM vote where in reality it became clear that shareholders had sufficient votes to block the Virgin proposal, and his coverage of the later events about the search for a private sector solution is somewhat limited.
The Crunch – The Scandal of Northern Rock and the Escalating Credit Crisis by Alex Brummer (ISBN 9781847940087)
This book, which has just been issued, was written by a financial journalist who is currently City Editor of the Daily Mail. It has a wider brief in that it covers the general credit crisis and the sub-prime lending debacle and their impact on the financial sector in addition to the events at Northern Rock. The author is more sensational in style and tends to attack almost everyone involved in the crisis including the board of the company, Mervyn King the Governor of the Bank of England, the FSA for defects in regulation, and others. He includes quite unnecessary jibes at SRM and RAB, but surprisingly has positive comments about John Kingman the Treasury mandarin who was much involved in the affair (the fact that he was a former journalist may have some relevance here).
He even includes a quotation from me. But that is just a repetition of a comment I made on the BBC about how much I had personally lost on my shares without any other background. As you can see, the style is populist in tone and tends to repeat the surface platitudes that one read in the press over the months that the crisis ran. Some idea of his style can be gained from his comments on the board of Northern Rock, which includes: “But in choosing Matt Ridley as chairman, the bank’s directors showed they were living in a past age when adorning the board room with the local toff was considered the normal thing to do”; and “The one non-executive director with the knowledge and experience that should have kept the trouble at bay was the chairman of the risk committee, Sir Derek Wanless. But just as he failed at NatWest, so he failed again at the Rock”; and “The Northern Rock board, with its cadre of weak non-executives, was ideal for Applegarth. It allowed him to run riot, without checks and balances”. Strong stuff but are these commonly held views supported by real evidence?
As with the first author he identifies the leak and its promotion by the BBC as one of the critical factors in causing the run. But he misses the significance of the EGM vote and the opposition of shareholders to the Virgin proposal, and his analysis of why the Government chose nationalisation is questionable.
Both authors suffer from a lack of detailed analysis of source material, and a shortage of first hand reporting from the players involved but it may be too early for that and clearly these books were rushed out quickly while the subject was topical and hence suffer as a result.
My recommendation if you want a different view on events to what you could have read in the popular press, and a less verbose and dramatic writing style, is the first book rather than the second. But both of them give a reasonable overview of the events as they occurred. Both publications mention the UK Shareholders Association and our activities.
Incidentally you can get a very good view on the history of events at Northern Rock simply be reading all the past “update” notes on our web site, which if put together would constitute a book by themselves.
Campaign Status
We continue to raise funds to support this campaign and the legal action by private shareholders and have now received donations of more than £125,000 - this figure is growing rapidly. But we still need more so please contribute if you have not yet done so. Some supporters have donated several times and seem to assume that whenever we remind people about donating they should donate again – thanks to all those contributors. But we really need those who have not donated anything to come forward.
We have recognised that the minimum suggested donation of £25 can he viewed as too much for those shareholders on limited incomes. There are large numbers of shareholders who received a few hundred shares in the original demutualisation. Many of these shareholders are now very elderly and are living on very small incomes (state retirement pensions for example). We suggest that if you fall into this category, or are otherwise living on state benefits, that a more appropriate donation would be £10 or £15.
However, you should bear in mind that if we win the legal case, then even a few hundred shares might be worth a considerable amount whereas if we lose you are likely to get nothing from the Government in compensation. We do need adequate funds to pursue this campaign and get good legal representation for shareholders. Donations can be made via our web site (see www.uksa.org.uk/Appeal.htm ) or via post to PO Box 62, Chislehurst, BR7 5YB (cheques should be made payable to the UK Shareholders Association).
Legal Action Status
As we have told you before, an application for a judicial review of the nationalisation Act and the Compensation Order has been filed on behalf of a representative group of private shareholders. We are still awaiting confirmation that it will go to a full hearing from the court which is likely to be in December of this year. We are also awaiting a response from the Government to the points raised in the application.
Calls for Pension Trustees to Take Action
Many of you are likely to have company pensions where the pension fund held shares in Northern Rock. As a FTSE member, it was widely held by pension schemes. It would be good to get their support for our campaign for fair compensation for shareholders, and we request that you to write to the pension fund trustees to ask them to pursue a claim for such compensation. A suitable proforma letter is present on our web site at: www.uksa.org.uk/NRK_Pension_Fund_Proforma.pdf
Media Coverage
We understand there will be an item on Northern Rock which will mention our campaign on the “Politics Show” on BBC2 television at 12.00 am on Sunday the 13th July but only in the regional edition for the north-east. However you will probably be able to view it on-line afterwards from this web page: http://news.bbc.co.uk/1/hi/programmes/politics_show/regions/north_east_and_cumbria/default.stm
Dennis Grainger has also done radio interviews in the north east and we continue to get good national press coverage.
Changes in Tripartite Policy
Considering the apparent recent changes in the policy of the Tripartite Authorities on banking sector support, and partial acceptance that they did not deal competently with the Northern Rock crisis, it seems unreasonable to us to insist that Northern Rock be valued on the assumption that no Government support is available. The Tripartite have made up to £100 Billion available to support UK banks in recent weeks. The terms, duration and scope of support now being provided were denied to Northern Rock. Northern Rock was not an isolated case, and its valuation should be on a “going concern” basis. To insist on "administration" as one of the pre-conditions for valuation is to discriminate against Northern Rock, and contrasts sharply with the approach taken by the Tripartite towards other mortgage banks such as Bradford & Bingley, HBOS and Alliance & Leicester. Government resistance to a fair valuation have forced the shareholders to commence litigation which would have been unnecessary if the Authorities had handled the matter more competently to start with.
Roger Lawson
Communications Director, UK Shareholders Association; and
Chairman, Northern Rock Shareholders Action Group
Email: uksa@uksa.org.uk
Web: www.uksa.org.uk
Direct telephone: 020-8467-2686
We have arranged two meetings for Northern Rock shareholders:
On Thursday the 17th July commencing at 6.30 p.m. at the Banqueting Suite, Newcastle Civic Centre, Barras Bridge, NE99 1RD - next to the Haymarket Metro and Bus Stations. Note that parking is available in the council’s car park in Sandyford Road after 6.0 pm, and in nearby public car parks.
On Saturday the 26th July at 10.30 am at St.Columba’s Church, Pont Street, London, SW1X 0BD. The nearest tube stations are Knightsbridge or Sloane Square which are less than 10 minutes walk away. There is an NCP car park in Cadogan Place, SW1X 9SA, which about 5 minutes away.
All shareholders and media representatives are welcome, but if you plan to attend either venue then please let us know so we can get some idea of likely numbers of attendees (make sure you advise which venue/date). These meetings will contain a briefing and explanation on what we have been doing on your behalf and the status on the legal action. They will also enable you to ask questions of course.
Book Reviews
Two books have been published that cover the events at Northern Rock in the last few weeks. Both books should be readily available from bookshops and are certainly worth reading if you are interested in what happened and why – I could not spot any major inaccuracies in either. Here are some brief reviews:
The Fall of Northern Rock by Brian Walters (ISBN 9781905641802)
This volume was written by a former Northern Rock employee who worked in the Commercial Lending operations in Leeds - so he was not at the centre of affairs but it gives the typical view of an employee as the crisis unfolded. It is a sober account that describes in sufficient detail the events as they occurred and his reactions to them.
He correctly identifies the leak of the Bank of England funding which was publicised by the BBC in a dramatic way as one of the critical factors in the cause in the run on the bank, a factor that the Treasury Select Committee did not look into. The Government has also consistently refused to look into the source of this leak.
But the author misses the significance of the EGM vote where in reality it became clear that shareholders had sufficient votes to block the Virgin proposal, and his coverage of the later events about the search for a private sector solution is somewhat limited.
The Crunch – The Scandal of Northern Rock and the Escalating Credit Crisis by Alex Brummer (ISBN 9781847940087)
This book, which has just been issued, was written by a financial journalist who is currently City Editor of the Daily Mail. It has a wider brief in that it covers the general credit crisis and the sub-prime lending debacle and their impact on the financial sector in addition to the events at Northern Rock. The author is more sensational in style and tends to attack almost everyone involved in the crisis including the board of the company, Mervyn King the Governor of the Bank of England, the FSA for defects in regulation, and others. He includes quite unnecessary jibes at SRM and RAB, but surprisingly has positive comments about John Kingman the Treasury mandarin who was much involved in the affair (the fact that he was a former journalist may have some relevance here).
He even includes a quotation from me. But that is just a repetition of a comment I made on the BBC about how much I had personally lost on my shares without any other background. As you can see, the style is populist in tone and tends to repeat the surface platitudes that one read in the press over the months that the crisis ran. Some idea of his style can be gained from his comments on the board of Northern Rock, which includes: “But in choosing Matt Ridley as chairman, the bank’s directors showed they were living in a past age when adorning the board room with the local toff was considered the normal thing to do”; and “The one non-executive director with the knowledge and experience that should have kept the trouble at bay was the chairman of the risk committee, Sir Derek Wanless. But just as he failed at NatWest, so he failed again at the Rock”; and “The Northern Rock board, with its cadre of weak non-executives, was ideal for Applegarth. It allowed him to run riot, without checks and balances”. Strong stuff but are these commonly held views supported by real evidence?
As with the first author he identifies the leak and its promotion by the BBC as one of the critical factors in causing the run. But he misses the significance of the EGM vote and the opposition of shareholders to the Virgin proposal, and his analysis of why the Government chose nationalisation is questionable.
Both authors suffer from a lack of detailed analysis of source material, and a shortage of first hand reporting from the players involved but it may be too early for that and clearly these books were rushed out quickly while the subject was topical and hence suffer as a result.
My recommendation if you want a different view on events to what you could have read in the popular press, and a less verbose and dramatic writing style, is the first book rather than the second. But both of them give a reasonable overview of the events as they occurred. Both publications mention the UK Shareholders Association and our activities.
Incidentally you can get a very good view on the history of events at Northern Rock simply be reading all the past “update” notes on our web site, which if put together would constitute a book by themselves.
Campaign Status
We continue to raise funds to support this campaign and the legal action by private shareholders and have now received donations of more than £125,000 - this figure is growing rapidly. But we still need more so please contribute if you have not yet done so. Some supporters have donated several times and seem to assume that whenever we remind people about donating they should donate again – thanks to all those contributors. But we really need those who have not donated anything to come forward.
We have recognised that the minimum suggested donation of £25 can he viewed as too much for those shareholders on limited incomes. There are large numbers of shareholders who received a few hundred shares in the original demutualisation. Many of these shareholders are now very elderly and are living on very small incomes (state retirement pensions for example). We suggest that if you fall into this category, or are otherwise living on state benefits, that a more appropriate donation would be £10 or £15.
However, you should bear in mind that if we win the legal case, then even a few hundred shares might be worth a considerable amount whereas if we lose you are likely to get nothing from the Government in compensation. We do need adequate funds to pursue this campaign and get good legal representation for shareholders. Donations can be made via our web site (see www.uksa.org.uk/Appeal.htm ) or via post to PO Box 62, Chislehurst, BR7 5YB (cheques should be made payable to the UK Shareholders Association).
Legal Action Status
As we have told you before, an application for a judicial review of the nationalisation Act and the Compensation Order has been filed on behalf of a representative group of private shareholders. We are still awaiting confirmation that it will go to a full hearing from the court which is likely to be in December of this year. We are also awaiting a response from the Government to the points raised in the application.
Calls for Pension Trustees to Take Action
Many of you are likely to have company pensions where the pension fund held shares in Northern Rock. As a FTSE member, it was widely held by pension schemes. It would be good to get their support for our campaign for fair compensation for shareholders, and we request that you to write to the pension fund trustees to ask them to pursue a claim for such compensation. A suitable proforma letter is present on our web site at: www.uksa.org.uk/NRK_Pension_Fund_Proforma.pdf
Media Coverage
We understand there will be an item on Northern Rock which will mention our campaign on the “Politics Show” on BBC2 television at 12.00 am on Sunday the 13th July but only in the regional edition for the north-east. However you will probably be able to view it on-line afterwards from this web page: http://news.bbc.co.uk/1/hi/programmes/politics_show/regions/north_east_and_cumbria/default.stm
Dennis Grainger has also done radio interviews in the north east and we continue to get good national press coverage.
Changes in Tripartite Policy
Considering the apparent recent changes in the policy of the Tripartite Authorities on banking sector support, and partial acceptance that they did not deal competently with the Northern Rock crisis, it seems unreasonable to us to insist that Northern Rock be valued on the assumption that no Government support is available. The Tripartite have made up to £100 Billion available to support UK banks in recent weeks. The terms, duration and scope of support now being provided were denied to Northern Rock. Northern Rock was not an isolated case, and its valuation should be on a “going concern” basis. To insist on "administration" as one of the pre-conditions for valuation is to discriminate against Northern Rock, and contrasts sharply with the approach taken by the Tripartite towards other mortgage banks such as Bradford & Bingley, HBOS and Alliance & Leicester. Government resistance to a fair valuation have forced the shareholders to commence litigation which would have been unnecessary if the Authorities had handled the matter more competently to start with.
Roger Lawson
Communications Director, UK Shareholders Association; and
Chairman, Northern Rock Shareholders Action Group
Email: uksa@uksa.org.uk
Web: www.uksa.org.uk
Direct telephone: 020-8467-2686
Thursday 10 July 2008
What's Happening about Compensation for your Northern Rock sales confiscated by the Government - 10th July
Below is a letter recently sent (either via email or in the post) from Robin Ashby to all members of the NRSS group.
Dear Shareholder,
Recently I attended a meeting of the UK Shareholders Association, who have also campaigned on this issue. Although we post their regular mailing on our blog (http://nrssg.blogspot.com/) I thought I’d write and give you an update.
Before any offer of compensation is made the Government needs a valuation. It is trying to appoint a valuer, but is reported to be having difficulties because some of the big firms are declining to bid. The reason for this could be twofold; the nationalisation law sets such harsh conditions that the value comes out at zero and shareholders (the very big ones like SRM and RAB, plus a representative number of private individuals) are taking legal action.
Step 1 is what is called an application for a judicial review of the nationalisation law. The Government isn’t fighting the moves for such an application but even so the legal process is very slow.
At the moment, the plaintiffs (shareholders) are awaiting a further response from the Government to its claims. This is currently expected at the end of this month. The plaintiffs then have until around 27th October to respond.
As I mentioned, the Government has agreed not to oppose the application for judicial review. A Consent Order is now needed; this has not yet been issued by the Court.
The hearing before two judges (one from the Chancery Division, the other from the Administration Court) is not expected before 1st December at the earliest. The hearing is likely to last 3-4 days. It is expected that the judgement will be reserved, so will probably be issued in late January next year.
As the court may have something to say about the valuation process, the valuer – even if appointed soon – can’t get to work in earnest until then. There is of course the possibility of plaintiffs appealing to the Court of Appeal or even the Supreme Court (as the House of Lords will be known.)
In the meantime, a valuer may start to establish the procedures that will be adopted before reaching a valuation. This will certainly include the possibility that shareholders – including you – will be able to make representations to the valuer about the method and the value. The valuation process could easily take a year and could also be challenged in court.
In parallel with all of this in the UK, certain non-EU shareholders have lodged a complaint with the European Commission. This seems to rotate around Article 56 and whether the Bank of England acting as lender of last resort is a form of State Aid (which the EU generally doesn’t allow). Throughout the banking sector in Europe of course, governments act as lender of last resort to ensure stability of the system. This could go all the way to the European Court of Justice – again, not a quick procedure.
The current application for a Judicial Review hinges on human rights (on deprivation of property). An argument could also be made from action for damages against the government on the basis that their actions caused and/or exacerbated the original run on the bank and thus nationalisation.
What else can you do? Firstly, and especially if you have any questions, can I urge you to attend the next UKSA meeting in the North East. This will be held on July 17th at 6.30pm in the Banqueting Suite, Civic Centre, Newcastle.
UKSA officers including Chairman Roger Lawson and local campaigner Dennis Grainger(the ex-employee who you may have seen on BBC TV Question Time) will be there. Let me or Roger know if you can come - we are expecting around 100 so far. Incidentally, Dennis hopes that there will be a piece about the campaign on the Politics Show on BBC TV on a Sunday lunch time.
The second thing you can do is to write to the Trustees of any pension fund of which you are a member, urging them to back the campaign for fair treatment. We can provide you with a specimen letter to build upon.
Next, if you haven’t already done so – or even if you have - you can write to your MP asking for a system of fair compensation. As one of the legal advisers has said, there is a moral argument as well as a legal one and a climate of opinion can be seen as important by judges. And if you would like to help the cause even more, see Dennis Gilmour at the meeting and offer to help him – he has a small band of about 6 people backing him up and more volunteers would be very welcome.
In conclusion, just to remind you why this is important. Even if you had the minimum number of shares when Northern Rock demutualised, these were worth over £6000 at their peak early last year. The Government believes you should receive nothing for them. But the Equitable Life campaign, which has been going on four years, shows what can be achieved with persistence when right is on your side. This week, after many trials and tribulations, it is reported that the Ombudsman will say that the Government should compensate those who suffered loss. I was one of them but I still expect it will take more time and trouble before I finally get justice. I hope that like me you will take a long view and do what you can to help the campaign.
With best wishes,
Robin Ashby
Dear Shareholder,
Recently I attended a meeting of the UK Shareholders Association, who have also campaigned on this issue. Although we post their regular mailing on our blog (http://nrssg.blogspot.com/) I thought I’d write and give you an update.
Before any offer of compensation is made the Government needs a valuation. It is trying to appoint a valuer, but is reported to be having difficulties because some of the big firms are declining to bid. The reason for this could be twofold; the nationalisation law sets such harsh conditions that the value comes out at zero and shareholders (the very big ones like SRM and RAB, plus a representative number of private individuals) are taking legal action.
Step 1 is what is called an application for a judicial review of the nationalisation law. The Government isn’t fighting the moves for such an application but even so the legal process is very slow.
At the moment, the plaintiffs (shareholders) are awaiting a further response from the Government to its claims. This is currently expected at the end of this month. The plaintiffs then have until around 27th October to respond.
As I mentioned, the Government has agreed not to oppose the application for judicial review. A Consent Order is now needed; this has not yet been issued by the Court.
The hearing before two judges (one from the Chancery Division, the other from the Administration Court) is not expected before 1st December at the earliest. The hearing is likely to last 3-4 days. It is expected that the judgement will be reserved, so will probably be issued in late January next year.
As the court may have something to say about the valuation process, the valuer – even if appointed soon – can’t get to work in earnest until then. There is of course the possibility of plaintiffs appealing to the Court of Appeal or even the Supreme Court (as the House of Lords will be known.)
In the meantime, a valuer may start to establish the procedures that will be adopted before reaching a valuation. This will certainly include the possibility that shareholders – including you – will be able to make representations to the valuer about the method and the value. The valuation process could easily take a year and could also be challenged in court.
In parallel with all of this in the UK, certain non-EU shareholders have lodged a complaint with the European Commission. This seems to rotate around Article 56 and whether the Bank of England acting as lender of last resort is a form of State Aid (which the EU generally doesn’t allow). Throughout the banking sector in Europe of course, governments act as lender of last resort to ensure stability of the system. This could go all the way to the European Court of Justice – again, not a quick procedure.
The current application for a Judicial Review hinges on human rights (on deprivation of property). An argument could also be made from action for damages against the government on the basis that their actions caused and/or exacerbated the original run on the bank and thus nationalisation.
What else can you do? Firstly, and especially if you have any questions, can I urge you to attend the next UKSA meeting in the North East. This will be held on July 17th at 6.30pm in the Banqueting Suite, Civic Centre, Newcastle.
UKSA officers including Chairman Roger Lawson and local campaigner Dennis Grainger(the ex-employee who you may have seen on BBC TV Question Time) will be there. Let me or Roger know if you can come - we are expecting around 100 so far. Incidentally, Dennis hopes that there will be a piece about the campaign on the Politics Show on BBC TV on a Sunday lunch time.
The second thing you can do is to write to the Trustees of any pension fund of which you are a member, urging them to back the campaign for fair treatment. We can provide you with a specimen letter to build upon.
Next, if you haven’t already done so – or even if you have - you can write to your MP asking for a system of fair compensation. As one of the legal advisers has said, there is a moral argument as well as a legal one and a climate of opinion can be seen as important by judges. And if you would like to help the cause even more, see Dennis Gilmour at the meeting and offer to help him – he has a small band of about 6 people backing him up and more volunteers would be very welcome.
In conclusion, just to remind you why this is important. Even if you had the minimum number of shares when Northern Rock demutualised, these were worth over £6000 at their peak early last year. The Government believes you should receive nothing for them. But the Equitable Life campaign, which has been going on four years, shows what can be achieved with persistence when right is on your side. This week, after many trials and tribulations, it is reported that the Ombudsman will say that the Government should compensate those who suffered loss. I was one of them but I still expect it will take more time and trouble before I finally get justice. I hope that like me you will take a long view and do what you can to help the campaign.
With best wishes,
Robin Ashby
Friday 4 July 2008
Northern Rock Shareholders Action Group – Meetings for Shareholders
UKSA has arranged two meetings for Northern Rock shareholders:
On Thursday the 17th July commencing at 6.30 p.m. at the Banqueting Suite, Newcastle Civic Centre, Barras Bridge, NE99 1RD - next to the Haymarket Metro and Bus Stations. They understand parking is available in the council’s car park in
On Saturday the 26th July at 10.30 am at St.Columba’s Church,
If you plan to attend either venue then please let UKSA know by sending an email to uksa@uksa.org.uk.
These meetings will contain a briefing and explanation on what UKSA have been doing on behalf of shareholders and the status on the legal action. They will also enable shareholders to ask questions of course. They hope to have a representative of one of the large institutional shareholders in Northern Rock speaking at the
These are the first meetings UKSA has held for shareholders since last November
Wednesday 2 July 2008
UKSA legal action
An application for a Judicial Review of the Nationalisation Act and the associated Compensation Order was filed on behalf of a representative sample of private shareholders on the 8th May 2008. SRM Global also filed a similar application on that date and RAB Capital subsequently filed such an application in addition (these two companies are the largest institutional shareholders).
A 15 page summary of the grounds for the application can be found on the UKSA website. UKSA continues to recruit members and seek donations to enable this process to proceed.
A 15 page summary of the grounds for the application can be found on the UKSA website. UKSA continues to recruit members and seek donations to enable this process to proceed.
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