Abbey franchise scheme and profit growth fail to impress

Abbey National, the high street bank, will next week launch its planned branch franchise scheme in 40 sites in four key areas around the country.

Abbey National, the high street bank, will next week launch its planned branch franchise scheme in 40 sites in four key areas around the country.

Branch managers who meet sales and customer retention targets could see their salaries rise from a current £60,000 to £160,000 as a result of the scheme.

Andrew Pople, Abbey head of retail, said that if the scheme is successful it could be rolled out nationally next year, taking £250m of branch-related costs off the Abbey National profit and loss account. The areas chosen for the trial are Newcastle, South Wales and in Ealing and Kensington in London.

The initiative is one of a series being launched by Ian Harley, Abbey's chief executive as he seeks to pep up Abbey's flagging share price and remove the threat of takeover which has been hanging over the group since late last year.

Mr Harley said that Abbey would definitely look at Equitable Life, the mutual insurer put up for sale, but he was cautious about the risk of overspending and insisted he would not consider issuing new equity to fund a takeover deal.

Abbey shares fell 28p to 740p yesterday despite figures showing profits up 5 per cent to £922m, in the first six months.

The results were ahead of City forecasts but analysts said that most of the growth had come from lower bad-debt provisions rather than increased revenue.

They were also concerned that Abbey had not been able to reverse the margin slide in its core retail operations and that costs were ballooning despite a branch reorganisation announced earlier this year.