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Former Northern Rock investors ask Theresa May for compensation

Jill Treanor
Thursday marks the 10th anniversary of the run on Northern Rock. Photograph: Cate Gillon/Getty Images

Former shareholders in Northern Rock are asking Theresa May to listen to their moral case for compensation after their investment in the Newcastle-based lender was wiped out when it was nationalised 10 years ago.

A delegation of investors will arrive at 10 Downing Street on Thursday to hand in a letter to the prime minister to set out their claim that it is unfair that the government has received all of the proceeds from sales of Northern Rock’s assets.

Thursday marks the 10th anniversary of the run on Northern Rock, when nervous customers seeking to withdraw their money queued at branches around the country after news broke that the bank had received emergency funding from the Bank of England.

Dennis Grainger, who worked at Northern Rock for 10 years, has led the campaign and will head the delegation to argue that there is justification to make payments to about 150,000 private shareholders who lost their equity when the bank was nationalised in February 2008.

Grainger said: “Three times I tried to get a meeting with David Cameron to ask him to review the unfair handling by the previous disingenuous administration. Now may be an appropriate time for the prime minister to apply the ‘fairness’ in which she clearly believes.”

The group he leads has continue to work on their claim despite a decision by the European court of justice in 2012 to dismiss their argument that they were entitled to a payout.

Part of Northern Rock was sold to Virgin Money in 2012 and since then other mortgages have been sold off and parts of the business managed alongside the mortgage book of Bradford & Bingley. The government has estimated it will make about £9.6bn from Northern Rock and the parts of Bradford & Bingley with which it has been combined, the campaigners said.

The former shareholders argue that have an “overwhelming case that the entire Rock handling and outcome clearly demonstrates discriminatory treatment, injustice and unfairness toward the shareholders who were ‘wiped out’ unjustly”.

Among their arguments is that the shareholders in banks that were rescued the following year – Royal Bank of Scotland, Lloyds TBS and HBOS – were not wiped out in the same way.

In his letter to the prime minister, on behalf of the Northern Rock Small Shareholders Association, Grainger said: “As the UK marks the 10th anniversary of the Northern Rock crisis in 2007 may we suggest to you that it would be appropriate now to try and achieve a just closure on an equitable, morally sound and fair basis.”

The run on Northern Rock began on 14 September 2007 after the BBC reported that the Newcastle-based lender had received emergency funding from the Bank of England. It was the first run on a high street bank in the UK since Overend & Gurney in the 1860s.