UK - Trustees of the Northern Rock Pension Scheme have yet to receive a guarantee regarding its pension deficit and the scheme's future, following questioning of the Board at the Extraordinary General Meeting.
The Board of the bank faced shareholders for the first time at yesterday's EGM, allowing Sir David Chapman, the chairman of trustees at Northern Rock pension scheme, to ask the current Board whether it "would stand behind the pension scheme" as the previous chairman - Dr Matt Ridley - had confirmed.
Although Bryan Sanderson, chairman of the Board, gave a general assurance which was welcomed by the trustees, the Board refused to confirm whether they have agreed to meet the request by trustees to guarantee the scheme by making it a secure creditor.
On January 11, scheme trustees admitted updated valuations suggested the pension fund had a deficit of £100m, which could rise to between £150-200m on an insured buyout basis, following the weakening of the sponsoring employer and its decision to switch 93% of its portfolio into gilts, bonds and cash deposits to increase security for members.
In addition, ofiicials confirmed it had told the Board of Northern Rock members and trustees of the scheme did not want to remain unsecured creditors unless "alternative protection is made available".
Although the government has made guarantees relating to retail depositors and certain other creditors, sources close to the trustees say the pension scheme has had no response from the Board, Bank of England or the HM Treasury for its request for a guarantee.
That said, a spokesman for the Treasury said for it to become involved the Board would need to put the request to the Treasury and ask for its help in providing a solution, and so far the board had not yet done this.
But he warned as with all the previous interventions into the Northern Rock situation, any solution must ensure both the taxpayer and depositors are protected and it maintains financial stability.
"The Board has not requested that [solution] from us, but the Treasury would take any decision on the basis of these principles," he added.
There has been increasing talk of and movement by the Treasury to prepare for the nationalisation of Northern Rock bank, should the listed firm be unable to agree a takeover deal. Virgin boss Richard Branson and private equity group Olivant have expressed their interest in buying the firm but no deal has yet been reached.
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