Pressure remains on Northern Rock

Northern Rock is expected to remain under pressure from its customers after seeking emergency support from the Bank of England.

The bank's 1.5 million savers have been urged not to panic after news of the move sparked queues of people anxious to withdraw their savings from branches around the country.

The UK's fifth biggest mortgage lender has been hit by soaring costs in wholesale lending markets, where it borrows cash to fund its mortgage business.

Alongside the emergency funding, the Newcastle-based bank warned it could take a profits hit of nearly £150 million due to the money market turmoil.

The British Bankers' Association urged worried customers to "calm down".

It said: "Northern Rock is a sound and safe bank and there is absolutely no reason for either mortgage customers or savers to worry."

But some queued for hours to empty their accounts as doubts among savers set in. Branches stayed open later to cope with the demand.

Despite protestations from chief executive Adam Applegarth that the Bank of England's support "reflected a recognition that Northern Rock is solvent", the panic was echoed on the stock market.

Northern Rock's share price fell more than 31 per cent, as the shockwaves rippled through the rest of the financial sector.

The Bank of England's offer of emergency aid to Northern Rock is extremely rare - the first example since its independence in 1997.

Chancellor Alistair Darling said the Bank of England had stepped in "to create a stable banking system".

He said: "People can use their accounts in the usual way, they can carry on making their mortgage payments in the usual way. Northern Rock will be able to carry on its business.

"That is precisely the right action to take when you are faced with the sort of problems that we have just now."

Mr Applegarth, who earned £1.35 million in salary and bonuses last year, is yet to draw on the emergency cash, which he called "a backstop in case we need to use it".

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