Northern Rock, also Britain's number-five mortgage lender and the top seller of new mortgages in the first half of 2007, said confidence among customers was returning. "The tide has turned ... the picture is quite obviously changing," a spokesman said.
Its call centres had received 3,472 calls by 1030 BST, less than 10% of the volume at the same time on Monday, and 80% of the calls were to reinvest money, it said. Customers were also cancelling previous orders to withdraw money, it said.
Long queues at branches seen on Friday, Saturday and Monday were not as evident on Tuesday, and the bank said there were lines at just four branches by mid-morning on Tuesday.
One customer said the bank was calling clients to ask them if they still wanted to withdraw their money after the government guarantee.
The bank said any customers who have had to pay a charge or transaction fee to withdraw money in recent days will have that charge refunded if they reinvest the money in a similar account by Oct. 5.
Half as many customers were accessing Internet accounts compared with Monday, and most people were logging onto the accounts at the first attempt, it said, after widespread problems with its Web site in previous days.
Northern Rock's problems stem from its unusually high reliance on wholesale markets to fund its mortgage lending. The cost of borrowing in that market rose sharply in recent weeks and liquidity dried up, as banks, fearful of potential exposure to dodgy U.S. home loans, became reluctant to lend to each other.
Northern Rock itself has negligible exposure to U.S. subprime loans and it and the government have said it remains solvent.
Its shares rebounded on Tuesday after the government guaranteed its deposits and regulators said they would consider overhauling the safety net for all U.K. savings.
Shareholders May Still Lose
Northern Rock shares, which had more than halved in value since Friday, jumped over 10% at one stage as the government's measures offered reassurance after the worst run on a major U.K. bank's savings in recent memory, and prompted hopes of a concerted effort to boost liquidity in the credit markets.
"Saying depositors are guaranteed still means equity holders can lose everything," banking analyst Alex Potter at Collins Stewart said. "What this will do is stem the outflow (of savings). It doesn't fix their problem without a reversion to normality on the wholesale markets."