No compensation for Rock shareholders: BDO

Northern Rock’s former shareholders are not entitled to any compensation for
their stake in the troubled bank, valuation experts from BDO have said.

Andrew Caldwell, valuations expert at the firm was told to treat the troubled
bank as if it was not a going concern and already in administration in
calculating how much the bank was worth after stripping out the government’s
£25bn rescue package.

Caldwell has come to his final decision after being appointed as valuer in
September 2008. He made a
provisional
statement to the same effect last December, but has now confirmed the
valuation.

BDO said in a statement: “Having applied the valuation assumptions that he
was required by law to apply, the Independent Valuer has determined that there
is no value in the shares (or right to receive shares) as at the valuation date
and therefore that no compensation is payable to former shareholders (and to
those whose rights to receive shares have been extinguished).”

Critics have said the valuation criteria, which BDO was paid £4.5m for
handling, was “rigged” by the
Government so shareholders got no money back.

These “assumptions” clearly did not apply when the nationalisation took
place,” The Northern Rock Shareholders Action Group said on its website.

“The company was not in administration, and was trading normally and as a
going concern (as Ministers have repeatedly said in Parliament and elsewhere).
Such terms of reference for the valuation of any company are likely to result in
a negligible valuation.

Further reading:

Rock
shareholders lose valuation review

McConville
joins Northern Rock as CFO