Customers stage $2.4bn run on bank

The Daily Telegraph
Sep. 15, 2007

THOUSANDS of nervous customers queued for hours outside branches of British bank Northern Rock today desperate to withdraw savings after it was forced to seek emergency funds to weather the global credit crunch.

Queues snaked round the block at branches of Britain's fifth-biggest mortgage provider for a second day after customers were reported to have withdrawn £1bn ($2.4bn) today.

Thousands more jammed the bank's phonelines and website to try to get their hands on their money, raising fears that a "run on the bank" could exacerbate problems.

Despite assurances that their cash was safe, some customers said they had lost confidence in Northern Rock after it went to Britain's central bank for emergency funds.

One branch manager was forced to ring the police when a couple barricaded her in her office after they were unable to withdraw £1m of savings, according to a report in The Sun newspaper.

"Everything we have in our lives is in there," former hotel owner Fiona Howard told the tabloid. "We would be left with nothing if it is lost."

Across the country, scores of customers queued from 0500 GMT (1500 AEST) to withdraw money after the story was splashed across front pages under headlines such as "Panic on the streets of Britain". Staff handed out leaflets saying "savings are safe".

"I just can't take the risk of there suddenly being an announcement that ... there's been another problem and they've closed the bank," one customer told Sky News. "I'm erring on the side of caution."

Another customer, Tony Looch, 68, told the BBC: "My confidence is shattered."

The chatrooms of financial websites were abuzz with people complaining that they couldn't log on to the bank's website or get through on the phone.

"I've been trying to take out my savings all night!" one user wrote on www.moneysupermarket.com.

Northern Rock is Britain's biggest casualty of a global financial crisis sparked by defaults on US mortgages.

It has been hit by banks' reluctance to lend as they hoard cash to cope with the fallout from bad US loans.

Yesterday, the Government said it had authorised the Bank of England to provide an unspecified amount of liquidity to Northern Rock.

A spokesman for the bank refused to comment on the amount of withdrawals made. The British Bankers' Association said people should "calm down".