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Last Updated: Tuesday, 15 January 2008, 17:09 GMT
Tough questioning for Rock management
By Nils Blythe
Business reporter, BBC News

Northern Rock chairman Bryan Sanderson at the Newcastle Metro Arena
Mr Sanderson told shareholders that they needed patience
Bryan Sanderson, chairman of Northern Rock, told the shareholders meeting that he had the "second-toughest job in Newcastle".

The unstated assumption is that the toughest role of all is being manager of Newcastle United.

Mr Sanderson certainly does have a difficult task trying to save Northern Rock, though the level of abuse he faced at the shareholders' meeting was very muted compared with the things an unsuccessful boss at St James' Park has to put up with.

About 600 shareholders turned up on a wet and windswept morning in Newcastle.

The Northern Rock board had booked a venue which can seat 9,000, so there was no scramble for seats.

"That's no answer"

Many of the questions they put to the directors were prefaced by tributes to the hard work of Northern Rock staff in difficult circumstances. And the suggestions were many, varied, and not always practical.

You must think we were born yesterday
A Northern Rock shareholder
One shareholder suggested that Northern Rock should go on the offensive and launch a takeover bid for Virgin Money, one of the businesses seeking to rescue the Rock.

The toughest questioning came from an elderly lady, who wanted to know why the former chief executive, Adam Applegarth, had been able to sell some of his Northern Rock shares well before the company ran into difficulties in August.

Mr Sanderson told her that Mr Applegarth had been quite entitled to sell his shares at the time.

"That's no answer," replied the indomitable lady to warm applause. "You must think we were born yesterday."

Mr Sanderson admitted that she was an opponent that he was unlikely to conquer in debate.

Room for manoeuvre

The shareholders meeting was called by two hedge fund investors - SRM and RAB Capital - who own 18% of Northern Rock.

Philip Richards, founder of RAB Capital, told the meeting that changing the company's rules to give shareholders more power over the directors' decisions would strengthen the management's hand in negotiations.

Bryan Sanderson argued that new restrictions on directors would reduce their room for manoeuvre.

He told shareholders that they needed patience and cool heads.

But the government's patience seems to be running out.

Having authorised a loan of over 26bn of taxpayers' money to Northern Rock, ministers have decided that time has come to decide whether private sector funding can realistically be expected for a rescue.

If it can not, Northern Rock will be nationalised.

The decision is likely to be made before the end of January.



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