Following today’s Northern Rock EGM, Lib Dem Shadow Chancellor Vince Cable sent out the following update:
With the decision by small shareholders at today’s Emergency General Meeting to reject all but one of the Hedge Fund proposals to restrict the action of Northern Rock’s board, it is clear the duplicitous attempts of these vulture funds to shore up their own position at any cost to the bank and the security of taxpayers money has failed.
Although this is, of course, good news it doesn’t change the fact that it is crunch time for Northern Rock. It now looks highly unlikely that a private sale will be achieved in current market conditions. Although it is just possible that Goldman Sachs will have unexpected success in raising money to support a buy out and repay the taxpayers’ rescue loan (currently estimated at £26 billion, excluding the further £30 billion in asset guarantees) it seems now that even the Government thinks the chances of this are remote.
Unfortunately both meaningful alternatives for the future of Northern Rock – public ownership or administration – appear unpalatable to the Government, and there is a real danger it may try to stagger on. This would be disastrous.