Showdown time in the struggle to save Rock

Despite last-minute behind-the-scenes negotiations, the meeting was expected to produce a showdown between the bank's two largest shareholders, SRM Global Fund and RAB Capital, and the board led by chairman Bryan Sanderson.

The two hedge funds, which between them own 18% of Northern Rock, have tabled four resolutions that aim to limit the board's power to act without full shareholder approval. The board opposes them and has put up five resolutions to elect new directors to oversee the bank's rescue.

Sources close to RAB today claimed they had found a "growing ground-swell of support for our motions". At the same time, the two funds would not reveal whether or not they will support the boardroom appointments. RAB's Philip Richards and SRM's Jon Wood are attending the meeting, and sources said they would make up their minds when they had heard the board's case.

Hermes, which looks after BT's pension fund and has more than £70 billion under management, today said it would oppose the rebel shareholders. The fund manager's David Pitt-Watson said: "Our concern is that these motions would tie the hands of the board and make it impossible for them to do their job at a time when Northern Rock is clearly in crisis."

But Robert Ashby, who represents the thousands of shareholders who were given shares when the building society became a quoted company 11 years ago and have seen most of their investment wiped out, expects big backing for the proposals from private punters.

He said: "As far as I'm concerned, the best result would be for the motions put by the two largest shareholders to stop the sale of large parts of the company's assets to be passed.

"We need these resolutions to go through to stop the board from simply chopping the company into smaller bits. Any suggestion that this would prevent an outright sale of the business is ridiculous."

The meeting takes place as the political crisis surrounding the fate of the former building society grows. It is now four months since the first run on a British bank in living memory, and if anything a resolution seems as far away as ever.

Treasury officials are playing down suggestions that nationalisation - the least favoured option by all parties - is imminent. But there is increasing tension between 10 Downing Street and the Chancellor.

Hopes of a rescue bid by Sir Richard Branson's Virgin Group or Luqman Arnold's Olivant still rest on Goldman Sachs raising enough finance. The investment bank had last night still to reveal its plans to the Rock board, with suggestions it is struggling to find enough backing.

Today's vote could be close, with many institutional investors choosing to attend the meeting rather than vote by proxy.