FORMER investors in Northern Rock yesterday reacted angrily after the
European Court of Human Rights rejected their claim for compensation.
Dennis Grainger, who acted as lead plaintiff in the case, said the court’s decision was “shocking stuff” and ignored the human right to protection of property.
Northern Rock was on the brink of collapse when it was nationalised by the former Labour government in February 2008 with no payment to shareholders.
Individual investors and hedge funds immediately launched a fight for compensation but this appears to be at an end after the Strasbourg-based court backed the UK government’s action.
“It was entirely legitimate for the state authorities to decide that, had the Northern Rock shareholders been permitted to benefit from the value which had been created and maintained only through the provision of State support, this would encourage the managers and shareholders of other banks to seek and rely on similar support, to the detriment of the United Kingdom economy,” the court’s judgment said.
A government-commissioned report concluded in October 2011 that Northern Rock shares – which last traded at 90p – were worthless at the point of nationalisation.