Northern Rock’s shareholders have begun a legal challenge against the Government to receive compensation for the shares lost when the bank was nationalised.
The UK Shareholders Association (UKSA) is hoping to get £5 per share for the bank, saying this was the value of shares at the time of nationalisation.
The bank was originally nationalised with a clause saying shareholders would receive the value of the bank without the government loans it had obtained.
However, since the bank was unlikely to have been a going concern without the support of taxpayers, the Government argued it was effectively worthless.
The UKSA has the support of around 7,000 shareholders and has submitted an application for a legal review into the nationalisation of the bank.
The £5 target is unlikely to be accepted, as the banks shares were trading at around 80p in the months before it was nationalised, values which would have been further eroded if the Government had withdrawn its support.
