Latest chapter in a sorry saga

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The Independent Online
ABBEY NATIONAL'S decision to withdraw from residential estate agency is another chapter in a sorry story of badly burnt fingers, writes Tom Stevenson.

Building societies and insurers that entered the market in the boom years of the late 1980s are also weighed down by heavy losses. Most have reduced their exposure, but all claim to be committed to their chains. General Accident added to the gloom yesterday with an increased loss from its estate agents of pounds 18.8m ( pounds 17.8m), warning that that improved levels of inquiries would not help profits until the second quarter at the earliest.

Prudential, Britain's biggest fund manager, retired from the fray two years ago. Its chief executive, Mick Newmarch, said at the time that the business was 'unsuited to centralised corporate control'.

Prudential had invested pounds 338m in a chain that numbered 830 branches at its peak and raised only pounds 30m when broken up and sold. The company lost pounds 49m on the business in 1989.

John Wriglesworth, an analyst at UBS Phillips & Drew, warned that with very few buyers around for estate agencies, Abbey's Cornerstone chain would have to be split up and sold in blocks. He thought Abbey would be lucky to get pounds 30m compared with an investment of about pounds 160m.

The other big chains are faring little better. Royal Life, which has 505 branches compared with 750 at the peak, has announced 41 closures. In 1992 the chain lost pounds 33m after a pounds 19m loss in 1991. Among the big building societies, Halifax showed a pounds 6.3m loss in the year to January 1992, an improvement on the previous year's pounds 18.3m deficit.

Nationwide, which has cut about two-fifths of its branches, lost pounds 12m in the year to last April after falling pounds 15m into the red in 1991. Woolwich lost pounds 11m last year.

Among banks, TSB showed a pounds 6m loss from its property services division in 1992 compared with a pounds 7m loss in 1991.

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