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Last Updated: Tuesday, 15 January 2008, 18:22 GMT
Rock fends off key shareholders
Union members protest outside Northern Rock meeting
Northern Rock's share price has plunged since September
Northern Rock has fought off most of the plans of rebel shareholders, that could have limited management powers to find a rescue deal for the business.

The bank said smaller shareholders had defeated all but one of the resolutions proposed at its extraordinary meeting.

The Rock's chairman said the resolution which was passed would not be a "material restriction" to a rescue bid.

The resolutions were put forward by two major shareholders, hedge funds SRM Global and RAB Capital.

Despite the rebels' defeat, several of the resolutions received significant backing.

'Worst solution'

"Whilst we are pleased that all but one of the resolutions proposed by SRM and RAB Capital were not carried, we recognise that a material number of shareholders did vote in favour of these resolutions," said Bryan Sanderson, Northern Rock's chairman.

"Shareholders should be assured that the Board of the Company will continue to work towards securing the best possible outcome for shareholders and other stakeholders in the company," he added.

The resolution that was passed means that Northern Rock's board must now consult existing investors before issuing new shares worth more than 5m.

A resolution that would have restricted asset sales was only narrowly defeated.

You must think we were born yesterday
A Northern Rock shareholder

The two hedge funds, which together own about 18% of the bank, had said the proposals would prevent its assets being sold off on the cheap.

BBC business correspondent Nils Blythe says the impact on the running of Northern Rock is going to be very small indeed.

On the other hand, our correspondent says, the hedge funds can argue that they have won widespread support among small shareholders.

Northern Rock's management and analysts had urged shareholders to vote against the proposals, saying they could endanger any possible private sector solution and made nationalisation a more likely option.

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We are concerned for our futures
Geordie Girl 7, Newcastle

Mr Sanderson said after the shareholder meeting that nationalising the bank would be the worst possible solution.

Northern Rock has named Sir Richard Branson's Virgin Group as preferred bidder for the bank, but it remains in talks with investment firm Olivant about a rival proposal.

The Newcastle-based bank has become Britain's most high-profile casualty of the global credit crisis since it ran into trouble in September last year.

It was forced to go to the Bank of England for a cash lifeline when money markets seized up, as it was no longer able to raise the required funds to run its mortgage business.

It has been given about 26bn of Bank of England emergency loans, but with government guarantees to savers and other lenders, the total aid package underwritten by the taxpayer comes to more than double that.

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Shareholders and staff speak outside the meeting



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