Mark Pain, the finance director of Abbey National, yesterday proclaimed his ambition to become chief executive of the mortgage bank after being appointed head of its wholesale banking division following a surprise boardroom shake-up.
Mr Pain replaces Gareth Jones, who is leaving the bank after 12 years in charge of its wholesale banking business. The unit has been the subject of investor concern lately, following the steep rise in bad debt provisions disclosed in July at the bank's half-year results. Mr Jones, 52, is expected to leave with one year's salary, plus performance related pay, totalling more than £500,000. He is to stay with the bank for several weeks to assist the in the handover of his responsibilities at the end of the month.
Mr Pain, who became finance director of Abbey aged 37, four years ago, said he had agreed to take the job because he had "one eye" on the chief executive's seat but had yet to manage any part of the Abbey empire. Abbey insiders said the change of duties was part of a "grooming process", but noted that Mr Jones had made an unsuccessful bid for the chief executive's job in 1997. "I have never run any part of the business. I can submit my credentials [to become chief executive] whenever I like, but I would probably want to spend three years in the [wholesale] business," Mr Pain said.
His immediate task would be to improve the City's understanding of the business. July's disclosure that bad debt provisions in wholesale banking rose from £10m to £64m in the half-year was greeted with a 10 per cent share price fall which wiped £1.8bn from the company's value. The division is exposed to the US corporate bond market, where the risk of default has risen following the slowdown in the US economy. Its portfolio also includes high-risk high-yield bonds.
Moves by Abbey yesterday to reassure investors over the performance of the division found a similar negative response from investors. Abbey shares closed down 5.2 per cent, or 56.5p, at 1,040p, making them the second highest faller in the FTSE 100, despite a Stock Exchange announcement that it was trading in line with expectations, was performing "very well" and was in "very good shape".
"The market has been nervous of risks in the wholesale bank for some time," said Richard Staite, an analyst at SG Securities. "The market's natural reaction to this resignation is to think there may be further bad news ahead."
"If there was something to say about it we'd be putting out a statement," Mr Pain said.
The immediate plans of Mr Jones were unclear yesterday. Abbey said he had had approached Ian Harley, the chief executive, one month ago about leaving the company. He did not have a job to go to and was considering taking a variety of non-executive posts. "He's said he'd be happy to be considered for a role in Railtrack," said an Abbey spokesman.
Andew Newell, the former finance director of the N&P, the mutual long-term savings institution, is to assume Mr Pain's former responsibilities.
In July, Abbey escaped a takeover bid by Lloyds TSB after the Government blocked the move on the grounds that it risked diminishing competition in the sector. There has since been speculation that Abbey may fall to a takeover from an overseas group such as National Australia Bank..Reuse content