Northern Rock has withdrawn its promise to pay shareholders a dividend totalling nearly $120.7 million.
The bank had previously insisted that it would not withdraw the offer of paying 28 cents dividend per share on 26 October, but after increasing pressure the board have decided to do just that.
“There’s still a lot of explaining to do. It’s highly likely the chairman and chief executive will be called before the Treasury Select Committee in mid-October,” says Michael Fallon, deputy chairman of the Treasury Select Committee, speaking to City AM.
The move represents a change of stance from Northern Rock who said they would honour the dividend even though it was not a legal requirement.