Northern Rock Today..................

Northern Rock panic eases as British government steps in
21 hours ago

LONDON (AFP) — The sense of panic over embattled British bank Northern Rock eased Tuesday as fewer savers queued to withdraw cash and the share price rebounded slightly following government pledges.

Some customers were still unhappy, lining up for a fourth day to withdraw cash from the British lender, which was forced to agree an emergency rescue deal with the Bank of England last Friday.

But the battered company's share price stood 6.6 percent higher in afternoon trade after diving by 55 percent over Friday and Monday.

Economists said an announcement Monday from finance minister Alistair Darling that the Bank of England would guarantee all existing deposits in Northern Rock helped support the share price Tuesday.

"Alistair Darling's statement appears to have introduced a degree of confidence into the system," Philip Shaw, a macroeconomist at Investec Securities in London, told AFP.

Darling on Tuesday also pledged to do "everything we can to ensure that the market returns to normal" after a panicked run on the Northern Rock bank.

"I'm determined we maintain a stable banking system," he said, shortly before talks with the Bank of England and the Financial Services Authority (FSA) over the crisis.

The central bank on Tuesday acted to help ease turmoil surrounding Northern Rock by pumping another 4.4 billion pounds (6.3 billion euros, 8.8 billion dollars) into money markets.

Meanwhile in Brussels, EU antitrust regulators are keeping an eye on the state aid being given to Northern Rock for potential competition issues, but currently see "no problem," a spokesman said.

In a bid to soothe customers, Northern Rock, which had run into difficulties borrowing money in the midst of a worldwide credit squeeze, took out a full-page advert in several national newspapers.

Chief executive Adam Applegarth said the firm was open for "business as usual" and insisted in the ad: "We will not let you down."

The reassurances from Darling and the firm seemed to have had an impact, with fewer queues outside Northern Rock branches across Britain on Tuesday.

"I don't think people should be worried now. Not after this morning and hearing the news everything is guaranteed," said Gus Thomson, 63, outside a branch in Glasgow. "I don't think there's any reason to panic."

No queues at all formed outside the Moorgate branch in central London, according to an AFP reporter, while the same was reported from other cities including Exeter, Bournemouth and Leeds.

In Liverpool the line was down to 40 people, while in Bristol staff described the situation as "very quiet," with only three customers in the first hour after opening.

Savers were still withdrawing their money in some branches, though.

Around 50 people were queuing outside the Kingston-upon-Thames branch in southwest London, while some 75 queued outside the Golders Green branch in north London, the BBC said.

Queuing outside the Kingston branch, pensioner Doria Watson said: "I don't know what we will do with the money yet but I don't trust what the government says."

Many commentators are closely watching Northern Rock's peers, such as Alliance and Leicester, for any sign that they could be similarly hit.

While shares in Alliance and Leicester lost over 30 percent of their value late Monday, it won back almost 27 percent of its stock value on Tuesday.

Meanwhile, the Financial Times warned that Darling's announcement Monday could end up being bad news for the British economy.

"The bail-out may give British taxpayers the worst of both worlds: implicitly putting them on the hook for the entire banking system, while not necessarily reassuring customers enough to prevent the bank run," its editorial read.

About three billion pounds was reportedly withdrawn over the counter or online by Northern Rock's savers between Friday and Monday evening.