Abbey axes two more wholesale banking chiefs

Abbey National has shed two more senior staff from its troubled wholesale banking division, which is set to drag down profits at the whole group this year.

The bank has made Alex Braun, the head of funding and asset management, redundant along with his deputy Paul Caldwell, who managed the bank's £37.5bn of corporate bonds and asset-backed securities.

Mr Braun, 42, had been at the bank for 13 years, while Mr Caldwell, 44, was an employee of Abbey for eight years.

The two are the latest casualties from the turmoil at Abbey's wholesale banking arm. The head of the division, Gareth Jones, resigned unexpectedly last November along with a number of colleagues.

It emerged last month that the wholesale business had a black hole in its balance sheet from rising bad debts, chiefly on investments in junk bonds.

Abbey announced on 11 June that the problems would dampen profit this year. Ian Harley, Abbey's chief executive, stressed the problems were being dealt with through a thorough restructuring of the wholesale division, including pursuing a more prudent investment strategy.

A spokesperson for Abbey said it was "absolutely not" the case that Mr Braun and Mr Caldwell had been fired over the problems in the division.

"Their roles have become redundant following the strategic review. The new management reconstruction of wholesale banking requires different skills sets," the spokesperson added.

The bank said management of its assets now would include more buying of assets and repackaging them to take them off its balance sheet by transferring them on to pension funds and other investment vehicles. This contrasts with the previous strategy, which mainly involved buying assets and holding them.

Abbey said the new plan would involve more use of derivatives. As a consequence, Mr Caldwell's role will be taken by Richard Williams, who worked on the derivatives desk at Credit Suisse First Boston. Mr Braun's duties will be split between him and Brian Morrison, group treasury director.