Northern Rock chief urges rejection of hedge funds' plan

The chairman of crisis-hit Northern Rock today urged investors to reject proposals from the lender’s two largest shareholders, saying they could hinder a rescue of the stricken business.

Two hedge funds, RAB Capital and SRM Global, are calling for restrictions on the board’s ability to sell the company’s assets or issue new shares in the group at an extraordinary meeting to be held in January.

But chairman Bryan Sanderson said: “The resolutions proposed in the view of the board restrict the ability of the company to act in a timely and appropriate manner.”

Northern Rock was at the centre of the UK’s first bank run in nearly 150 years in September after soaring borrowing costs in the credit crunch. It has borrowed an estimated £25bn (€34.5bn) in emergency funding from the Bank of England so far.

Mr Sanderson added: “I believe that these resolutions are unnecessary, and in view of the difficult and challenging circumstances currently affecting the company, potentially damaging.”