Northern Rock shareholders say BDO's valuer role is 'nonsense'

BDO
Stoy Hayward has taken on a ‘poisoned chalice’ by agreeing to act as
independent valuer of the stricken mortgage lender Northern Rock, shareholders
of the bank have said.

BDO was appointed this week to put a price on what Northern Rock would have
been worth without government help, to assess compensation for shareholders.

Roger Lawson, chairman of the
Northern Rock
Shareholders Action Group, said he did not expect much from the valuation
process.

‘The valuation process is going to be a nonsense. I don’t know what the
valuer’s going to do. Under the government’s terms of reference it basically
means that you can tell that the answer is going to be zero within five minutes.
It’s nice of [BDO] to take on this poisoned chalice,’ he said.

Though some have estimated the value at 400p a share, others suggest the bank
was worthless, meaning BDO could have a tough job arbitrating the issue.

BDO is being paid a fixed fee of £4.5m for the job. It is unclear who BDO’s
rivals for the contract were, but
Ernst
& Young, KPMG and
PricewaterhouseCoopers are all
thought to have been conflicted.

Former shareholders of Northern Rock include SRM Global, listed hedge fund
RAB Capital and Legal & General.

The government’s terms of reference say the company should not be treated as
a going concern, which scuppers any chance of a meaningful value being attached
to the bank, Lawson said. ‘Who would pay anything for a business that’s not a
going concern?’

A Treasury spokesman said:‘It is for the valuer to determine compensation.
That is why we have appointed somebody at arms length.’ BDO said it would
conduct a transparent valuation.