Page last updated at 07:07 GMT, Thursday, 8 May 2008 08:07 UK

Rock shareholders begin legal bid

Northern Rock
Northern Rock was nationalised in February

Shareholders in nationalised bank Northern Rock are launching a court challenge over compensation they are due to receive.

The UK Shareholders Association (UKSA) is submitting an application for a legal review into the terms of the Rock's nationalisation.

Shareholders are set to get what their investment would have been worth had the government not propped up the bank.

The UKSA is eyeing about 5 per share, but fears investors may get much less.

'Secure investment'

About 7,000 shareholders are backing the action, the UKSA says.

Northern Rock was nationalised in February after the credit crisis forced it to seek emergency funds from the Bank of England.

The move triggered the first run on a UK bank in more than a century.

Last month the Newcastle-based company began a 90-day consultation period with unions and staff over plans to cut 2,000 jobs.

Many of those who had shares were employees of the firm who saw the Rock as a safe, secure investment, said David Greene of Edwin Coe solicitors which is representing some of the shareholders.

He estimated that without the legal challenge, shareholders would get almost nothing for their stake.

"Right to the end, there were private bidders who were willing to purchase Northern Rock," he said.

"Shareholders had no reason to believe there would be nationalisation."

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