Northern Rock’s chairman came out fighting yesterday with a letter to MPs in which he defended the troubled bank’s business strategy. However, he revealed that customers had closed almost one in ten accounts in Britain’s biggest bank run in living memory.

Matt Ridley, who has been chairman of the Newcastle-based bank for three years, wrote yesterday to almost 100 MPs, members of the Treasury Select Committee and to Alistair Darling, the Chancellor.

He said that the situation at the bank was “stabilising” and that it continued to hold assets “well in excess of liabilities”. Dr Ridley hit back at accusations that Northern Rock had been a reckless lender, pointing out that its mortgage book contained no sub-prime loans: “Our arrears are, in fact, half the industry average. We lend to everyday people in the UK buying their homes.”

He denied allegations that Northern Rock’s executives had let down small shareholders by withholding information about the pitfalls of the bank’s strategy of raising money in the wholesale money markets to fund its mortgage lending. “The board is well aware of its responsibility to its many shareholders,” Dr Ridley said.

He said that less than 10 per cent of Northern Rock accounts had been closed in the two weeks that followed the news that the bank had been forced to ask the Bank of England for a loan. “Savers have recently been returning,” he said.

Dr Ridley hinted that MPs would be better putting aside their criticisms of the board until the bank’s future was more secure: “Whilst the board fully acknowledges its responsibilities . . . our priority is to find the best way forward.”

The bank came close to collapse after banks and investment funds refused to lend to other banks, particularly those using mortgage assets as collateral.

In addition to its borrowing from the Bank of England, for which it pays above the base rate, Northern Rock benefited from a guarantee by Mr Darling who said that he would protect its customers from losses.

Northern Rock’s bankers have frantically sought a buyer for the business but rival British and overseas banks have resisted.

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