Customers queuing outside a branch of the British mortgage lender Northern Rock in York, England, yesterday, as savers across the country seek to remove their money from the crisis-hit bank, while an investor in the Northern Rock walks to the back of the queue to make a deposit. - AP

Shareholders joined customers Monday in a run on one of Britain's largest mortgage lenders, driving shares sharply lower despite continuing assurances from the government that the company was solvent.

Lines of account holders snaked around branches of Northern Rock PLC, Britain's number five mortgage lender, waiting to take billions in funds elsewhere.

"Most people with savings accounts fear what will happen if people continue to take all their money out," said Trevor Buckley, who was withdrawing his deposit from the Northern Rock branch in Exeter in western England. "If the bank went bust, we would lose everything."

'No need to worry'

Treasury chief Alistair Darling insisted that will not happen.

"Whatever happens, people can get their money out of the bank, they don't need to worry about that," Darling said in an interview on GMTV.

The market looked for the crashing share price to tempt a takeover bid within days, but several big British banks also saw their stocks fall in a dismal day for the financial sector.

In an interview published Monday, United States Federal Reserve Board chairman Alan Greenspan warned of difficulties ahead in Britain's booming housing market.

Britain, which has a higher proportion of adjustable-rate mortgages than the United States, is more exposed to some of the problems now roiling the U.S. real estate market.

Howard Archer, chief British economist at Global Insight publishing company, said Northern Rock was uniquely reliant on short-term money markets and its crisis was unlikely to spread to other institutions.

"There is a very real risk that Northern Rock's problems, if not sorted out quickly, will have a significant dampening impact on both consumer and business confidence," Archer added.

Trading in the bank's shares was briefly suspended Monday morning, but not before they tumbled 140 pence to 298 pence (US$2.81 to US$5.98), on top of a 31 per cent fall Friday. By mid-afternoon, shares hovered between 280 pence (US$5.62) and 290 pence (US$5.82).

The run started after Northern Rock disclosed Friday that it had received emergency funding from the Bank of England because other banks balked at loaning it cash in the wholesale money markets.

The British Broadcasting Corp. reported Sunday that customers had withdrawn nearly £2 billion (US$4 billion) from Northern Rock accounts, though CEO Adam Applegarth refused to give a figure.

"If it is £2 billion, I don't think it is that much of an issue," said Alex Potter, a banking analyst at Collins Stewart.

-AP