Northern Rock's charity fights rushed sale


Northern Rock's charitable arm is mounting a campaign to prevent the government from rushing through a firesale that might cause unnecessary damage to the bank and the north-east of England.

As the bank's shares climbed 16.2p to 151.8p on news that bidder JC Flowers has secured £15bn in funding for a takeover, the Northern Rock Foundation decided to lobby politicians and other shareholders to ensure that any agreed offer is 'fair and reasonable'.

Meanwhile, the Newcastle-based bank appointed Citigroup to work alongside Merrill Lynch as adviser, suggesting bids may be imminent.

The Foundation receives 5pc of the bank's profits every year and has distributed more than £155m to good causes since 1997.

Chairman Alastair Balls, a former civil servant, says: 'It is only prudent and responsible that we attempt to safeguard the interests of those employed by the bank and the charities that it helps.'

The charitable trust owns special shares which would convert to equity equivalent to 15% of the group in the event of a takeover.

However, as things stands, this equity might not be worth anything, leaving hundreds of charities without the financial help that they relied upon. There are also fears of mass redundancies among the Rock's 6,500 employees.

Balls has hired Europa Partners to advise the Foundation. It plans to write to the bank's major shareholders such as RAB Capital, to see whether they want to band together to put pressure on the company to ensure that 'a transaction is not concluded on unfavourable terms'.

Northern Rock's charity fights rushed sale

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