Rock investors 'may get nothing'

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The bank's shareholders - including more than 100,000 small investors - could receive no compensation under plans to value Northern Rock on its worth without a Government guarantee, according to City experts.

Banking analysts said that the Government may yet decide to offer investors a payment to avoid a lengthy legal battle.

But any payout is still likely to leave shareholders nursing steep losses, with Northern Rock's value having plummeted from £5.3 billion this time last year to just £375 million.

Shares, which have been suspended from trading, closed at 90p on Friday, a fraction of the 1226p peak seen a year ago.

Sandy Chen, analyst at Panmure Gordon, said: "The current shareholders will want to see some money out of their investments, but the financial reality is that shareholders are likely to get nothing.

"Even with a Government guarantee, we thought shares were worth zero anyway."

Northern Rock's two largest shareholders, hedge funds RAB Capital and SRM Global, who own around 19%, are thought to be preparing to sue the Government unless they receive at least 400p a share.

The UK Shareholders Association, which represents Northern Rock's small shareholders, vowed on Sunday to block nationalisation and take legal action to ensure fair compensation.

Alex Potter, an analyst at Collins Stewart stockbrokers, said there was a chance shareholders may receive a small payout, but any compensation was likely to be far less than 400p a share.