Northern Rock panic eases after Darling move

Queues have shrunk outside some Northern Rock branches after Chancellor Alistair Darling said customers' savings would be guaranteed.

Britain's fifth-largest mortgage lender and the top seller of new mortgages in the first half of 2007, said confidence among customers is returning.

"The tide has turned, the picture is quite obviously changing," a spokesman said.

The bank said any customers who have had to pay a charge or transaction fee to withdraw money in recent days will have that charge refunded if they reinvest the money in a similar account by October 5.

Mr Darling said on Monday: "Should it be necessary, we, with the Bank of England, would put in place arrangements that would guarantee all the existing deposits in Northern Rock during the current instability in the financial markets."

He added: "This means that people can continue to take their money out of Northern Rock. But if they choose to leave their money in Northern Rock, it will be guaranteed safe and secure."

Mr Darling has chaired a special committee with representatives of the Bank of England and the Financial Services Authority to assess the situation at Northern Rock.

Industry experts estimate £3 billion has been withdrawn from Northern Rock accounts since Friday. Fears grew after the bank turned to the Bank of England to ease its liquidity problems.

In a full page advertisement published in various national newspapers, Northern Rock chief executive Adam Applegarth said on Tuesday that the company is "open for business as usual".

He wrote: "May I begin by offering our customers my sincere apologies for the anxiety and inconvenience that we have caused you. I know how worried many of you must have been.

"Today I want to make it emphatically clear to all Northern Rock customers that we are open for business as usual."

Meanwhile, the mortgage-lender's crisis has forced the Bank of England to pump an extra £4.4 billion into money markets.

The BoE said: "The action is being taken to offset the disturbance to conditions in the short-term money markets following the announcement of lender of last resort assistance to Northern Rock.

"Since then, secured overnight money market rates have again been unusually high relative to bank rate."

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