Rock valuation branded a ‘charade’ at the High Court

The terms of the Northern Rock valuation have been savaged by lawyers at the
High Court.

Michael Beloff QC, representing RAB Capital, branded the terms of the
Northern Rock Compensation Scheme Order an ‘elaborate and sophisticated

The judicial review began yesterday and pits the Treasury against powerful
investors, looking to salvage what they regard as a suitable level of
compensation from the remains of the troubled bank.

SRM Global, the bank’s largest shareholder, Legal & General and
representatives of the 150,000 smaller investors are all weighing into the court

The hearing is expected to last for the rest of the week with a judgment set
to be issued within a fortnight.

Under the current terms of the order, valuers from BDO Stoy Hayward must
treat the bank as if it was in administration and not a going concern, two
factors which shareholder groups have said can only lead to the Rock being
valued as worthless or at a very low price.

David Pannick, QC acting for SRM Global, said the Treasury ‘chose to
nationalise on terms that will ensure that the former shareholders receive, at
best, derisory compensation for their shares’.

Pannick argued the assumptions of the scheme ‘will ensure that the government
obtains full ownership of this valuable business having paid nothing, or next to
nothing, for it and so inevitably makes a profit when it sells it off in due

Further reading:

Rock valuation at centre of High Court showdown

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