Abbey lays acquisition plans

Abbey National yesterday set out its criteria for choosing a building society to take over, but refused to be drawn by shareholders into discussing which one, writes Peter Rodgers.

Revealing pre-tax profits in the first quarter 20 per cent higher than a year ago, Lord Tugendhat, the chairman, told the bank's annual meeting that a potential acquisition would have to enhance the value of Abbey's mortgage book or improve the geographical location of its branches.

Abbey had already made a move to increase its mortgage book by buying Canadian Imperial Bank of Commerce's mortgage business. If a society came along that suited Abbey's criteria the bank would consider it, he said.

But Lord Tugendhat pointed out the difficulties of taking over building societies, saying that if Abbey found one its management could rebuff an approach without even telling the members.

This highlighted the corporate governance problems of building societies. Shareholders pressed him to say which society Abbey was interested in, so that they could shift their savings to it.

In the first quarter UK retail banking, life assurance and treasury operations all increased their profits, the latter in the face of turmoil in the markets, Abbey said.

Abbey shares slipped 6p to 442p. Analysts said they were not changing their forecasts for the year of profits of up to pounds 900m.