Sunday, February 17, 2008

Q and A session with Chancellor Darling on BBC

Q: What does this mean for Northern Rock shareholders?

The general consensus is that it is not good news for shareholders, who have already seen their shares - which were valued at over £12.50 this time last year - slump to be trading at 90 pence at the close of business on Friday.

So the beleaguered firm has gone from being worth £5.3bn to just £375m, and these shares will be suspended on Monday morning.

Shareholders will be compensated, with the amount of money they are to receive set by a government-appointed panel.

If shareholders are unhappy with the offer, there is the prospect of legal action, and Mr Peston says it is "inevitable" that the government will be sued by some of the largest stakeholders which are hedge funds.

They have reportedly written to the Treasury calling for 400p per share in compensation.

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