Since the provision of funding to Northern Rock by the Bank of England last year, the subsequent offers made by various bidders and the final announcement by the Chancellor to Nationalise Northern Rock, there has been an enormous amount of speculation as to the future for anyone involved or affected by these events.
Whilst at Northern Rock it may be termed by the Government as 'business as usual' but for former shareholders, borrowers, tax payers and investors it is quite a different story.
Whilst many held these shares since demutualization of the former Building Society, a number have bought shares leading up to the loan to Northern Rock by the Bank of England, and others since the loan from the Bank of England was made.
Private individuals who held Northern Rock shares, accounted for a sizable proportion of the shareholding and they have been stripped of assets for which they may not be compensated.
The UK Shareholders Association is preparing legal representation to challenge the government on this matter for compensation and urges Northern Rock's ex-shareholders to join the campaign.
Chris has recently been appointed to the Northern Rock Shareholder Action Group Committee, a sub-committee of the UK Shareholders Association with the aim of pursuing a fair valuation of Northern Rock without the rigged terms of reference set in the existing Compensation Order. More information about this action, the UKSA and membership can be found at www.uksa.org.uk/NorthernRock.htm
Chris will be holding meetings for former Northern Rock Shareholders in the coming weeks to rally support and provide further updates on the campaign. If you would like to join one of thrse meetings, please contact Chris on 0161 434 6016.
The UKSA website address http://www.uksa.org.uk/ where more information and membership forms can be found.
It would seem Northern Rock are actively encouraging borrowers to move their mortgages, loans and other borrowings away from the 'Rock, in part by INCREASING the rates applicable to these loans.
Despite there being THREE 0.25% rate reductions by the Bank of England by April 2008, Northern Rock borrowers had seen just 0.3% come off their mortgage borrowings.
The latest October and November cuts in 2008 have still only seen a small portion of these cuts passed on to borrowers.
This flies in the face of Gordon Browns recent requests of all lenders asking them to pass the rate reductions onto their mortgage customers in full - how can the Government expect the lenders to do this when the Governments OWN BANK Northern Rock has failed to do so.
If you are a Northern Rock mortgage customer, speak to us about the potential options for you - before it gets out of hand.
The initial loan agreement to Northern Rock by the Bank of England of circa £25bn COULD have left the Government with a bill of around £2,500 per taxpayer IF Northern Rock later went into liquidation - which it hasn't - and probably wasn't.
Nationalisation has taken this 'nominal' £25bn up to around £110bn - over 4 times the initial potential liability to the UK's Purse. To put this figure into perspective - £110bn is probably enough to run the NHS for a whole YEAR.
Taking account of the latest announcements to inject £400bn into the banks by way of taking a 'share' in the banks, puts the amounts and actions taken in dealing with Northern Rock into perspective.
Many clients do not believe they have 'invested' in Northern Rock or similar institutions. This couldnt be further from the truth. The Northern Rock scenario impacts everyone who has investments in Endowments, ISA's, PEP's, Pensions, Unit trusts, Investment Bonds and similar where some of the the funds have been invested in Northern Rock shares. Any Northern Rock shares held by your particular fund at the time of Nationalisation will no longer be owned by your fund thus adversly affecting the return on your investment.
More recently this year we have seen the share markets deteriorate rapidly, markets upon which millions of us rely to repay our mortgages and provide our income in retirement.
Company pension schemes have suffered significantly - anyone intending to retire this year or next could be in for a nasty shock.
We can refer you to our specialist Investment and Pension advisers who can advise you on your portfolio and how to get the best out of these investments. Contact us to speak to either David Walsh** or Simon Elton** who are Partners of the St. James's Place Partnership.
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