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Daily Insurance Industry News
Tuesday 16th of October 2018
March 5, 2008

L&G considers Northern Rock losses

by Gill Montia

Story link: L&G considers Northern Rock losses

Legal & General (L&G), which is a Northern Rock shareholder, will be recording a loss as a result of the mortgage bank’s liquidity crisis and its eventual nationalisation.

The insurer holds around 5% of bank, meaning that its clients could have lost around £250 million since the bank’s share price peak, this time last year.

The value of Northern Rock shares at the time of nationalisation will be set by an independent arbitrator and the Treasury.

The arbitrator has yet to be appointed but the valuation is unlikely to be acceptable to the bank’s shareholders.

L&G’s head of equities, Mark Burgess, has stated: “We … await with keen interest details of how the process of arbitration will work, and the quantum of compensation for Northern Rock’s shareholders.”

Some are interpreting Mr Burgess’ comment as a warning, bearing in mind the fact that L&G gained notoriety for suing the Government over the forced nationalisation of Railtrack and has also brought a successful case against the Financial Services Authority over mis-sold endowment mortgages.

 

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