L&G ready to sue over Rock

Legal & General could drag the government through the courts by if the compensation package for Northern Rock shareholders is not generous enough.

The insurance giant is Northern Rock's largest institutional shareholder with a 4.8% stake, but it has warned it may wage a legal battle with the government.

Mark Burgess, L&G's head of equities, told the Daily Telegraph : 'In light of the government's recent decision to nationalise Northern Rock, we note the level of central bank funding in Europe where the central banks continue to act as lender of last resort to the banking system. We therefore await with keen interest details of how the process of arbitration will work, and the quantum of compensation for Northern Rock's shareholders.'

The government is in the process of appointing an adviser to work out the value of Northern Rock after the state aid it received has been stripped out. Whoever wins the role will have to secure the backing of the ICAEW, who have been brought in by the Treasury to ensure a suitably qualified candidate is hired.

Further reading:

Institute to play central role in Rock firm choice