Why did Northern Rock get into financial difficulty?

The events leading to the NR nationalisation began with the well-known difficulties affecting the global financial market in 2007. 

Why was Northern Rock nationalised

This Government stated that the best option was ‘temporary’ public ownership that would protect the interests of (a) customer deposits (b) protect taxpayer interests and (c) support UK market stability.

Who owned Northern Rock?

The largest shareholder was the Northern Rock foundation, which owned 15%. SRM Global and RAB Capital owned 11.5% and 8.8% stakes respectively, which is believed to be clients funds under their management. There were over 150,000 small shareholders. 

Is the Government due to return the bank back to former Shareholders like it did with the Lloyds Banking Group?

The short answer is NO. The government passed emergency legislation to push through the nationalisation in 2008, and wiped out NR shareholders completely. HBOS, Lloyds, and RBS shareholders were treated differently, and retained part of their equity in the banks, which have grown in value since they were part-nationalised. 

Will the taxpayer make a loss on Northern Rock or has the Government loan been paid back in full?

The taxpayer has not made a loss on Northern Rock, in fact the bank has paid all government loans back in full at penal rates of interest and returned a large profit for the government. 

Where was the regulation to protect Shareholders and to prevent Northern Rock from getting into financial difficulty? 

There wasn't suitable regulation in place to deal with NR being the first casualty of the global financial crisis. Instead NR was being singled out as having a risky business model at the time when in fact the problems were much greater. The tripartite consisting of HM Treasury, the Bank of England and the Financial Services Authority were like rabbits caught in headlights. 

What has happened to the remaining assets belonging to Northern Rock and will the Government make a profit on the nationalisation?

All NR assets have been sold by the government and the taxpayer has made a huge profit as a result of the loan to own policy they adopted in 2008. 

Has the Government provided compensation to former Shareholders?

No compensation was paid to former shareholders. At the time of nationalisation, the government recognised that shareholders should be compensated but they rigged the valuation process to ensure nothing is paid out. Unjustified assumptions were used in the compensation order. 

Why wasn’t Northern Rock sold to the likes of Olivant, Lloyds or Virgin who were all keen to purchase the bank?

There were several credible offers on the table to buy NR. However, the government was unwilling to offer guarantees and assurances to the bidders and felt it was better value to the taxpayer to nationalise instead. 

Why should shareholders be compensated for risking losing their money when investing because the value of their investment can rise or fall?

Shareholders understand the risk of investing in shares but having your life savings and pension pots being stolen by the government is not one of them. The issues at the bank were proven to be part of a wider financial crisis and not specific to NR yet it was treated differently to other banks. Also, it's worth noting that NR shareholders are also taxpayers and were consumers of financial products, in this case equities, so were entitled to consumer protection too, but it is well documented that regulation failed to protect us.

Without the support from the Government Northern Rock was insolvent so why should the Taxpayer compensate Shareholders?

The issues at NR were part of the global financial crisis. Many other banks such as HBOS, Lloyds, RBS and Barclays suffered the same issues. Apart from Barclays which sought funding from the Middle East, all of the other banks received support from the government. It was wrong to wipe out NR shareholders and we should be compensated to make the situation right. 

Also, compensation will not be a charge on taxpayers because it is payable out of the surplus funds, built over the past 16 years, as a result of asset disposals.

Why are former Shareholders still fighting for compensation after losing all UK court cases and the ECHR case against the UK Government? 

The simple answer is that we must fight on to gain justice for the thousands of pensioners and savers who lost their life savings and nest-eggs.

Many shareholders are elderly and relied on the pension pots they built up in NR. They, finally deserve justice and fair treatment by their government. 

I am having trouble remembering and finding my paperwork. Do you know where I can find my share records?

As a first step, a review is being sought from the Government and if they agree to conduct this and decide to award compensation to former shareholders, we can request answers to questions around proof of ownership and share certificates.

There is no need to search for documents at this stage, but if the papers are readily available, we recommend obtaining them just in case they are needed urgently. If you have paperwork, it's important to keep it safe. 

I don't have my share certificates, will my broker have a record of my purchases?

We don't know for sure, but if it's a reputable platform we can assume they have a record, although it's been over 16 years since nationalisation and some may have changed IT systems and deleted old records. It might be a good idea to talk to your broker and/or look at your old bank statements. If you don't have your old bank statements, you can go to the nearest branch to find the transactions if you have access to the same bank account..

I am struggling to remember my broker, is there another way of confirming my shareholding?

The vast majority of individual shareholders of public companies keep their shares in nominee accounts. Unfortunately, there is no other way to find out about your shares if they were held in the name of a broker. There is a share register, but it does not give a breakdown of each individual shareholder because you bought the shares through a nominee e.g. HSBC, Barclays, Lloyds, HBOS, Interactive Investors, Hargreaves Lansdown etc.