Northern Rock shares tumble again

LONDON, England (CNN) -- Shares in embattled British bank Northern Rock slid further on Monday, with the stock opening 31 percent lower after tumbling by a similar amount last week.

Other blue-chip banking stocks were also down, with Alliance & Leicester falling 8 percent and Halifax Bank of Scotland slipping almost 3 percent. FTSE 250 Index stock Bradford & Bingley fell 9 percent.

Last week, Northern Rock asked for an emergency Bank of England loan amid the global credit crisis. The bank had not drawn on the emergency facility by Sunday.

The bank, Britain's fifth-largest mortgage lender, is the first in 15 years to be bailed out by British regulators.

By 8 a.m. on Monday, dozens of people were queuing outside Northern Rock's branch in Birmingham, repeating scenes seen on Friday and Saturday, Britain's Press Association reported.

Police were called in some cities on Saturday to steer panicked crowds away as Northern Rock bank branches closed for the day.

Customers withdrew $2 billion from the bank on Friday, The Financial Times reported, citing an unidentified person described as close to the situation.

Chancellor Alistair Darling and the country's Financial Services Authority tried to assure customers there was no doubt over Northern Rock's solvency.

The authority "has reiterated yet again tonight that it is satisfied that Northern Rock is solvent, can carry on doing business and, crucially, paying out money if people want to withdraw their funds," Darling told Channel 4.

Press reports said Northern Rock was preparing itself for a sell-off. Quoting unidentified sources, the paper said one plan would divide the bank's mortgage portfolio between other major banks in what would be a private-sector rescue of the lender.

The bank made the loan request Thursday because it relies heavily on wholesale money markets for cash, and had been unable to borrow the amounts it required from other banks since the "credit crunch" in money markets.

That was caused in part by U.S. banks making mortgage loans to Americans with poor credit histories.

Darling insisted on Monday that the economy as a whole was well placed to ride out the international crisis.

"What is encouraging from our point of view here in the United Kingdom is that the fundamental positions -- the strong economy, the fact that we have got low interest rates and low inflation which we haven't had in the past -- do stand us in good stead and that is very, very important," he told the BBC. E-mail to a friend

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