N Rock customers queue for funds as crisis deepens

Minister for Finance Brian Cowen has said he hopes Irish customers of the Internet-based bank Northern Rock will take some reassurance from the clear statements made about the bank's financial security as hundreds of people queued today to withdraw their savings.

Thousands of Northern Rock customers in Britain and Ireland queued at branches as the bank's shares fell again by over 30 per cent today. Britain's fifth-biggest mortgage lender, which on Friday was rescued by Bank of England funding, said there was no need for investors or customers to panic and that it remained solvent.

Mr Cowen said this evening: "Well of course it's their own money and they have anxiety and they have worries.

"I think people can take reassurances from what's been said, not only today by the Chancellor of the Exchequer and by the Irish management of Northern Rock, but it's consistent with what they had said when this broke on Friday morning," he told RTÉ's Six Onenews.

"But I take the point that this is an Internet bank and it doesn't have large retail outlets like other front-line banks would have and it's having great difficulty, it seems, in dealing with people. So I understand the inconvenience it's causing and I think they [the bank] do too. It's important they deal with people's queries as expeditiously as is possible.

"But I think reassurance can be given from the statements that have emanated from the Chancellor of the Exchequer. It is a British-regulated bank and I think they have been quite clear, admirably clear, as to how they see the situation."

Mr Cowen said he understood Northern Rock had sent staff over from Britain to augment the staff here, to help deal with Irish customers.

He said he hoped people would be reassured by statements from the regulatory authorities in Britain that the bank is viable and that their deposits are safe.

He hoped the bank would then be able to deal with the demand from people who wished to withdraw their deposits "as quickly as possible".

"There are people out on the street and one doesn't like to see that happening."

Despite today's reassurances, Northern Bank customers appeared set to continue pulling out savings, and by early today its shares had more than halved in value since Thursday's close.

At midday, some 300 customers were queuing from the front doors of the discreet Harcourt branch in Dublin all the way back to beyond the Bleeding Horse pub on Camden street. Some said they had been waiting since 6am.

Joseph McMahon (67), from Laytown, Co Meath, said he and his wife had placed their life savings with the bank after more than a year's careful consideration. He was in the queue today after spending eight hours online last Saturday, trying to access his money.

"I sent an e-mail to them on Saturday saying 'if you tell me my money is safe, then I won't take any further action,'" he said. "But I didn't get a reply. We're panicking now. This is really serious."

The bank has about 25,000 customers in Ireland, holding an average of €90,000 each in deposits. However, following news that the bank was in financial trouble on Friday last, customers in both Britain and Ireland have begun withdrawing their money.

Most of those queuing in Dublin today appeared to be pensioners trying to withdraw their savings in person after failed attempts to access their accounts through the Internet or telephone.

Irish customers complained that they had received no advice from the bank's officials this morning, despite large numbers queueing for hours outside the building.

Northern Rock has set up a helpline at 1850-315115.

Fears have mounted that a run of withdrawals will exacerbate the lender's funding problems and force a fire sale of the business. The problems were triggered by the global credit crunch as banks, worried about exposure to dodgy US mortgage debt, increased the price of lending to each other.

As the fallout threatened to have wider economic and political impact, British finance minister Alistair Darling said authorities would consider every option to solve the crisis.

By noon shares in the bank on the London market were down over 30 per cent at 269 pence, following a 31 per cent tumble on Friday to cut the bank's market value to under £1.3 billion sterling. The shares fell as low as 290p and have lost 70 per cent this year.

The Newcastle-based bank provides one in 13 British home loans. The Bank of England, as lender of last resort, stepped in on Friday to offer emergency funding to ease its funding problems after it struggled to borrow in money markets.

The bank had not drawn on the emergency facility by Sunday, the British government said.

News of the emergency funding line sent thousands of Northern Rock's 1.4 million savings customers rushing to branches and to the Internet for their money. Customers were estimated to have withdrawn about £1.5 billion on Friday and Saturday.

Some reports said as much as £2 billion has been withdrawn, which would represent about 8 per cent of the bank's deposits.

Additional reporting Reuters