Northern Rock Shareholders’ Meeting Set For 15 January

Northern Rock hoped to conclude their sale before Christmas, but as that have proven impossible, the bank has agreed to hold an emergency shareholders’ meeting on 15 January to discuss the sales process. This will be the first real opportunity for shareholders to confront the bank’s management since it hit the buffers in September.

Two major shareholders of the bank want to restrict its ability to sell assets or issue new shares, so it could be a fiery meeting.

The bank came in for criticism last week when it came to light that it had wrongly told borrowers that mortgage payments had become overdue.

The extraordinary meeting was requested by hedge funds RAB Capital and SRM Global – who hold 16% of the shares between them - and the bank responded by saying that the proposed resolution would not help the rescue of the bank. They have proposed that shareholders have the power to block any move by the bank to sell 5% of its assets, buy assets or make large issues of new shares.

Chairman Bryan Sanderson wants the proposals voted out. He said: “I believe that these resolutions are unnecessary and, in view of the difficult and challenging circumstances currently affecting the company, potentially damaging.”

At the moment a Virgin Group consortium and investment group Olivant are the two potential buyers for the bank.

Northern Rock came under fire from its mortgage holders when standing order payers were requested to make their monthly payment as soon as possible. The letters were sent early to avoid December postal delays, but the bank denied it was trying to get customers to pay more than they normally should by mistakenly paying twice.

The bank said that the letter clearly stated that it should be ignore if a recent payment had been made or arrangements were in place, but did admit that it had been sent to all standing order customers whose payments would be made automatically in any case