Rock board set for key vote


Rock board set for key vote
Members of the Northern Rock board face a grilling from shareholders at a crucial meeting today.

As speculation that the struggling bank is to be nationalised grows, hundreds of investors are expected to attend today's emergency general meeting (EGM) at the Metro Radio Arena in Newcastle.

While shareholders are likely to demand a greater say in the future running of the firm, it is believed that two mooted rescue bids - from Richard Branson's Virgin Group and private equity company Olivant - have been hampered by funding problems, further increasing the possibility that the bank will be nationalised.

Northern Rock became the most high profile victim of the credit crisis in September when it was forced to turn to the Bank of England to secure more than £25 billion of emergency loans after being unable to raise funds to run its mortgage business.

But with government guarantees to saves and other lenders, the total cost of Northern Rock's exposure now comes to more than £50 billion.

Two major shareholders, SRM Global and RAB capital, which own 18 per cent of Northern Rock between them, are understood to be unhappy with the bank's progress so far and have put forward proposals to restrict the bank's ability to sell of company assets cheaply.

The Northern Rock board have said today's meeting is "potentially damaging" and has urged shareholders to oppose the resolutions put forward by SRM Global and RAB Capital, saying they would "materially restrict the power of the board to act at a time when prompt, decisive action may be required".

It has also emerged that Ron Sandler, former head of Lloyds of London, has been lined up to run the bank should it fall into public ownership.

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