Savers queue to pull funds from stricken Northern Rock

By Simon Rabinovitch

LONDON (Reuters) - Anxious customers formed long queues at Northern Rock NRK.L branches across Britain on Friday, with many withdrawing their deposits but some satisfied by the stricken mortgage lender's reassurances.

Fears were sparked by the Bank of England's (BoE) emergency loan to Northern Rock, Britain's eighth-largest listed bank, whose access to funds dried up as the cost of borrowing between banks rose in the broader credit crisis.

The Bank of England said Northern Rock was solvent and only in need of short-term help, but many customers were not taking any chances.

"I've spun my savings off to another bank," said John Duncan, 51, a chartered surveyor, on his way out from a London branch. "You read the headlines in the paper: Northern Rock, cash SOS. If you had money in there what would you do?"

Queues snaked through branches and spilled onto streets as tellers tried to soothe frazzled nerves.

"Our savings are all right they said, so we are just going to take their word," said Robert Butler, who works for a maintenance company. "We're just small fry. We don't know what's going on behind the doors. We just hope everything calms down."

Northern Rock's Web site was also inundated, frustrating those who sought to withdraw funds.

"I've been trying to get my money out since 7 o'clock this morning and I'm failing," said customer Andrew Murphy." I appreciate that it's very unlikely to go bust but I don't want to take the risk with my savings."

Northern Rock Chief Executive Adam Applegarth appealed for patience and advised customers that it was "business as normal".

"You don't get better than being backed by the Bank of England," he said in reference to the emergency loan.

Some leaving Northern Rock branches said they had withdrawn the bulk of their deposits.

"I'm going to leave a small amount in there but I'm taking most of it out," said Peter Pye, 60, retired university lecturer from Stevenage. "I am losing a month of interest but it's all about peace in mind."

Deposit insurance from the Financial Services Compensation Scheme protects customers for up to 31,700 pounds should a bank default.

(Additional reporting by Jonathan Cable and Gavin Haycock)