Small shareholders in Northern Rock face getting as little as 5p in the pound for their shares as the High Court rules against a judicial review of the government’s shareholder compensation scheme.
Shareholders’ lawyers argued shares were unfairly valued in favour of the government at the time the bank was nationalised.
But Lord Justice Stanley Burnton and Mr Justice Silber, disagreed with shareholders saying: ”We have some sympathy for the position of the former long-term shareholders of Northern Rock, who doubtless believed they had an investment in a reliable bank.
‘Ultimately, however, they entrusted their investment to the hands of the management of the company.
‘As it turned out, their business plan was flawed and could not survive the unprecedented circumstances of the latter part of 2007.
‘In our judgment … none of the former shareholders has any justifiable claim against the defendant (the Treasury) beyond their entitlement under the compensation scheme.’
Around 1,500 private shareholders had taken up the case alongside two major investors, SRM Global and RAB Capital in the hope of clawing back some of their investment.
But now some analysts are predicting the investors could get back only pennies per share.
The lawlords have given the shareholders leave to appeal.
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