Abbey National emerges from wholesale disaster

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The Independent Online

Abbey National will next month signal it is emerging from the restructuring that has seen it withdraw from its wholesale business and cut back its life assurance operations. The troubled bank will also reveal that the whole process has cost it around £2.5bn.

Abbey National will next month signal it is emerging from the restructuring that has seen it withdraw from its wholesale business and cut back its life assurance operations. The troubled bank will also reveal that the whole process has cost it around £2.5bn.

Luqman Arnold, who was brought in as chief executive nearly two years ago after the ousting of Ian Harley, is expected to reveal another set of poor figures when he announces the group's half-year results at the end of July.

However, he will temper that by saying there is light at the end of the tunnel. Finance director Stephen Hester, who has been in charge of sorting out the group's disastrous wholesale side, will be able to say that £50bn out of the operation's £60bn of problem investments have now been sold. Investors should expect another £5bn to be sold by the end of the year.

Abbey National first ran into problems when its ill-fated foray into wholesale banking sparked two years of annual losses. The unit lent money to Enron and WorldCom, both of which collapsed in corporate scandals, and included a large portfolio of risky junk bonds. Under the stewardship of Mr Arnold, the group is refocusing on its consumer banking roots.

Yet issues remain with the life assurance division. There, problems are thought to be greater than supposed, and restructuring costs are likely to top £1.5bn.

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