Rock shareholders vote to restrict some board power

By Steve Slater

NEWCASTLE (Reuters) - Investors in ailing bank Northern Rock backed proposals to curb some of the board's powers, but rebel investors failed to push through changes aimed at preventing a firesale of assets.

Investors in the Britain's biggest casualty of the credit crunch gathered on Tuesday for their first showdown with the board since the bank's near-collapse four months ago, as expectations grow that Northern Rock will be brought under state control.

In an unexpectedly strong push for a bigger say, shareholders voted at an extraordinary general meeting to curb the board's powers to issue new shares.

But they narrowly failed to pass more significant proposals that would have restricted the board's ability to sell off large slices of its assets, a move the bank -- which has already sold off a portfolio to help pay off its 26 billion pound debt to the Bank of England -- had warned could hinder a rescue.

Northern Rock shareholders did, however, show their support for the board itself, backing top executives including Chairman Bryan Sanderson and Chief Executive Andy Kuipers.

Northern Rock said it recognised a "material number of shareholders" backed proposals made by hedge funds RAB Capital and SRM, but the bank said in a statement that the changes would not restrict its ability to push ahead with a strategy review, due next month.

"This slightly ups the chances of a rescue package," analyst Alex Potter at Collins Stewart said, adding more restrictions could have further delayed a private sector solution.

"But the rescuers still need to put together a financing package. The funding is the big thing."