Head of Northern Rock Action Group ‘devastated’ at European court of human rights ruling on compensation claim
Dennis Grainger, 65, from Cramlington, Northumberland, is a former employee of Northern Rock, though he now leads the Northern Rock Action Group. He had shares in the bank and at one point they were worth £114,000. The money was something he had been keeping for his retirement but it has all been lost, and he now dedicates his time to the action group.
For the first year he set up a stall collecting signatories for a petition to Downing Street. Then the legal action commenced in Europe, which was thrown out on Wednesday by the European court of human rights.
He says he has resigned himself to the loss of the money but has concerns for others who have been hit hard. Some pensioners have died in the four years they were waiting for the judgment.
It was five years ago this week, on 9 August 2007, that the financial crisis struck Northern Rock. Then chief executive Adam Applegarth dubbed it “the day the world changed”, as money markets shut down across the globe on fears that the US sub-prime mortgage crisis was about to spiral out of control.
Grainger, a former assistant accountant, had been buying shares through a saver scheme since 1998. He and the 150,000 other shareholders are annoyed that the accountancy firm, BDO, concluded, after an 18-month study, that the shares were worthless when it was nationalised.
The shares were trading at 90p just before the bank was taken into public ownership, and the shareholders believed their stock to be worth between £2 and £4 a share.
On Wednesday, Grainger and his fellow shareholders reacted with anger to a European court ruling that effectively ended their hopes of receiving compensation from the government. The European court of human rights said it was “inadmissable.” Grainger and the investors have no right of appeal.
“I think we’ve been robbed and I feel sorry for the other shareholders who are going to suffer,” he said. “In the north-east there’s a fierce loyalty to the company. People feel let down, cheated.” He wants the coalition government to look at it after the “good” part of Northern Rock that was sold to Virgin Money at the start of the year.
The rationale was if shareholders had benefited from the sale of the bank, then investors at other banks would favour nationalisation and the judgment said it would damage the UK economy.
“I and every other shareholder are completely devastated by the European ruling,” he said. “We’ve waited four and a half years. All we’d hoped for was justice and fairness. It’s the end of the line … although we hope it’s not. Everyone’s devastated and there’s a feeling of lost faith in the system.”
He said some people don’t want to live in the UK any more as a result. “So much damage has been done to the average man and woman in the street who’ve lost everything.”
He has met 2,000 people on the street. Some are ordinary grandparents who had shares. He knows of one man who’s lost £50,000. But, he says, it is not the fact they have lost money, it is the way it happened. And consequently they feel cheated.
“The average person feels they’ve been cast aside and made scapegoats for the failures of the financial services system. The previous government was disingenuous to us.”
The company is a big loss to the north-east, where it was a flagship company and the Newcastle United shirt sponsor.
“For the nine or 10 years I worked there, it was giving people what they wanted: good mortgages at low rates,” Grainger said. “How could it be brought to its knees? And why was it that RBS and the rest of them were treated differently? The government protected these other banks.”
He said all the loans made to Northern Rock are being repaid. The compensation orders, he claims, were rushed through parliament.
“People feel upset. They feel they can never trust the political system again and they’ve lost faith in the Bank of England and Europe. The whole thing has been a whitewash.”
He was in the middle of putting evidence to Europe but they threw the case out. “Northern Rock must have known back then that it was starting to struggle to borrow money. It should have acted quickly and stopped lending money.” Some shareholders do not want to vote again and believe the judicial system was politically motivated.
“We never objected to the company being nationalised, but it’s not the fact it was nationalised, it’s the fact they took shares and made a profit. People feel rubbished.”