Feb. 18 (Bloomberg) -- RAB Capital Plc, the second-biggest shareholder in Northern Rock Plc, dropped to a two-year low after the British government said it will nationalize the mortgage lender.

RAB declined 6.9 percent, or 4.75 pence, to 64.5 pence in London Stock Exchange trading, the lowest since January 2006. RAB has fallen 27 percent this year.

Chancellor of the Exchequer Alistair Darling said yesterday that compensation for Northern Rock shareholders will be assessed by an independent panel. The U.K. Shareholders' Association yesterday said this may mean the company is worthless and that shareholders ``get nothing.'' Robin Ashby, spokesman for the Northern Rock Small Shareholders' Group, today said a fair price would be 425 pence per share.

Northern Rock, which closed on Feb. 15 at 90 pence a share, was suspended today. RAB Capital's 8.18 percent holding of 46.4 million shares was worth 41.7 million pounds ($81.4 million) based on Feb. 15 trading.

David Trenchard, an outside spokesman for RAB at Tulchan Communications, declined to comment.

The Northern Rock shares are held in RAB's Special Situations fund, managed by Philip Richards, the company's chief executive and co-founder. The $2 billion fund has dropped 9.6 percent this year through Feb. 14, erasing its 2007 gain, according to net asset value figures filed with the London Stock Exchange.

The Northern Rock position accounted for less than 1 percent of RAB's assets under management, Executive Chairman Michael Alen-Buckley said Jan. 18.

Last Updated: February 18, 2008 11:41 EST