Rock appeal gathers pace

<!--StartFragment--> INVESTORS in nationalised lender Northern Rock yesterday launched a legal bid to overturn a High Court decision which they claim will leave them with &ldquo;derisory&rdquo; compensation.<br /><br />Institutional investors RAB Capital, SRM Global and a collective of private shareholders numbering more than 200,000, who are backed by the UK Shareholders Association, say the government&rsquo;s compensation scheme does not reflect the value of the bank and is almost certain to leave them with nothing.<br /><br />They said the Treasury&rsquo;s decision to instruct independent valuers BDO Stoy Hayward to treat the firm as being in administration was flawed, because government support had merely propped up the bank, rather than saving it from collapse.<br /><br />Lord Pannick QC, for the appellants, pointed out that the government had repeatedly stated that Northern Rock was a solvent business. The Treasury contends that without state support the bank would have gone under.<br /><br />Meanwhile, it is thought that investment bankers advising on the sale of the bank have aired the possibility of splitting the bank into two businesses &ndash; one housing retail deposits, the other the banks&rsquo; mortgage book. The businesses would then be sold seperately.<br /><br />The arrangement&nbsp;&ndash; which is one of several under consideration &ndash; would see the Treasury sell &pound;19.5bn worth of retail deposits seperately from the Rock&rsquo;s &pound;66.7bn mortgage. The mortgage book buyer would also have to shoulder the Rock&rsquo;s bad debts.<br /><br />Treasury officials yesterday refused to comment on the plans and played down suggestions that the government was close to finding a buyer.<br /><br /> <!--StartFragment--> <strong>NORTHERN ROCK</strong><br /><strong>THE TREASURY&rsquo;S ADVISERS</strong><br /><br /> <!--StartFragment--> If the government does find an early buyer for Northern Rock, it will take advice on the sale proceedings from bankers at Credit Suisse, which has been consulting for the Treasury since the onset of the banking crisis.<br /><br />The Swiss bank&rsquo;s Treasury team is headed by UK chief executive James Leigh-Pemberton (above), the son of former Bank of England governor Robin Leigh-Pemberton.<br /><br />Credit Suisse would not comment on the identities of its advisors yesterday, but they are likely to include Ewan Stevenson, a managing director in the investment banking division, and Sebastian Grigg.<br /><br />Both have been integral to the bank&rsquo;s team working with Treasury officials.<br /><br />For the Court of Appeal case, the Treasury is using top legal firm Slaughter and May.<br /><br />The principal partners consulted during the relevant period have been Elizabeth Barrett, Guy O'Keefe, Sarah Paterson, Stephen Powell, Charles Randell, George Seligman, William Sibree and Chris Smith.<br /><br />The Treasury has also consulted several barristers on the matter. <!--EndFragment--> &nbsp; <!--EndFragment-->