Northern Rock may have to close its doors to new savers within days after a recent surge of deposits put it close to breaking competition rules imposed after its nationalisation in February.

A rush of people seeking safe places to put their savings means that Northern Rock is in danger of exceeding a commitment to take only a 1.5 per cent share of total UK retail deposits. Worried savers have been pouring money into Rock, nationalised in February just months after the first run on a British bank since the 19th century. They have been attracted by a cast-iron government guarantee on its deposits introduced last year and designed to stem panic withdrawals.

Rock removed a number of savings products from the market this week to stem inflows, but experts said that this was unlikely to deter savers scrambling for havens after recent banking turmoil. If the cash inflow lasts, Rock could reach its limit in the next few days, forcing it to stop taking money from new customers.

Alex Potter, an analyst at Collins Stewart, the broker, said: “Clearly people are nervous about the banking system, so it could be just weeks or even days before we see Northern Rock close its doors to new savers.”

Michelle Slade, of Moneyfacts.co.uk, the financial website, said: “Northern Rock has already cut rates to deter customers, but that clearly hasn’t worked as savers have been queueing at its doors to take advantage of the government guarantee. It appears to be close to exceeding the limit.”

In a statement, the bank said that retail balances remained within the 1.5 per cent cap, imposed when it was taken into public ownership to restrict its ability to use its government backing to unfair advantage. However, it said that upheaval in financial markets, including the nationalisation of Bradford & Bingley, its rival, and the government-brokered takeover of HBOS, had led to a “sizeable” inflow of deposits, particularly in recent days.

At the end of June, Rock’s UK savings balances stood at £13 billion, up from £9.4 billion last December. This was substantially below the £17.6 billion needed to breach Rock’s 1.5 per cent cap. However, banking analysts believe more than £1 billion of savings has flooded into the bank in the past two weeks alone.

Products barred to new customers yesterday included Silver Savings, Silver Savings 30, Business Reserve and a range of fixed-rate bonds. The move comes after the recent removal of Rock’s fixed-rate access bond and its online e-saver product. Existing customers are not affected and can continue to use their accounts.

Rock is not the only bank to gain from a flight to safety as the crisis in the banking sector has unfolded. National Savings & Investments, in which deposits are also fully protected by the Government, said that it had seen an increase in deposits “over and above what it would normally expect”.

Ramifications of a decision by the Irish Republic’s Government to offer an unlimited gurantee in all bank deposits earlier this week continued to reverberate around Europe. Yesterday Greece offered a similar guarantee.

In UK banks other than Rock, only the first £35,000 is guaranteed under the Financial Services Compensation Scheme, although Gordon Brown has confirmed that this will be legally raised to £50,000, probably next week.

— Nationwide yesterday became the latest lender to hit homebuyers with a rise in interest rates. Britain’s biggest building society lifted rates 0.2 percentage points on fixed-rate and tracker deals, adding £300 a year to the cost of mortgage repayments on a £150,000 loan. Abbey, the largest writer of new mortgages this year, is tipped to lift rates soon. Lenders have raised rates as the high cost of interbank borrowing squeezes the mortgage market. BM Solutions, the buy-to-let lender, yesterday also raised fixed and tracker deals by 0.2 points, its second rise in a week.

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