Northern Rock shareholders on Wednesday accused the Treasury of rigging the valuation of the newly nationalised bank to avoid paying them fair compensation, so firing the first salvo in a potentially bruising legal battle.

Angry investors plan to launch a judicial review next month to determine whether the government has acted unlawfully in determining how shareholders’ payouts will be calculated. SRM Global, the hedge fund that is Northern Rock’s biggest shareholder, is banding together with the UK Shareholders Association to quash legislation that would value the stricken lender as if it were in administration, rendering their shares almost worthless.