Loans -
Northern Rock Shareholders Complain To Treasury - 17/02/2008
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Shareholders of the stricken bank Northern Rock have criticised the
government's handling of the crisis over the last 5 months.
A legal team for hedge fund SRM global – supporters of Northern Rock's
in-house rescue bid – have delivered a report to the government, stating
that the treasury had wrongly applied the rules of the European State Aid plan
to its emergency funding and therefore needed to reconsider the criteria it
used for rescue proposals.
The decision over who will take over the bank has to be reached by the end of
this month, and it is thought the move is designed to draw the government away
from the consortium bid led by Richard Branson's Virgin group. If the Northern
Rock board won the bid, shareholders would be better off than if Virgin
successfully took over.
The government has called on both bidders to revise their proposals in order to
offer the government more money in return for the financial aid it is
guaranteeing. Should Virgin win the bidding war for the bank, which offers
financial services such as personal loans, they would be expected to pay back
up to £200 million to the government.
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