Dismissal of MD seen leaving A&L a bid target

Alliance & Leicester dismissed its second top executive in two years yesterday, saying that managing director Peter McNamara would stand down with immediate effect.

The announcement came amid speculation that Mr McNamara and A&L's executive chairman, John Windeler, had disagreed about the strategy of the mortgage bank, which is struggling to fend off takeover interest by larger rivals.

The bank will no longer have an overall managing director position but Richard Pym, the finance director, is becoming managing director of retail banking and will report directly to Mr Windeler. David Bennett, previously group treasurer, will take over as finance director.

A&L yesterday denied a serious falling out among senior board members, saying "discussions were held with Peter over the last 24 hours and he resigned with mutual consent".

But analysts said the decision marked a disagreement over the running of the bank. "Peter was brought on board as their strategist and he was the driving force behind their review, which they now appear to be reversing ­ this is only going to make them more of a takeover target," one said.

Mr McNamara joined from Lloyds TSB last June and helped revamp A&L's strategy to include ambitious cost cutting and revenue targets by 2003. A&L still plans to meet its cost cutting ambitions but has put on hold plans to boost revenue. A&L's shares yesterday closed up 3 per cent at 747p.

The bank has undergone many changes at senior management level in recent years. Two years ago, Peter White resigned as chief executive after a failed merger with Bank of Ireland. After threatening to sue for unfair dismissal he agreed a settlement worth £1.8m.

Mr McNamara's severance package was still being negotiated yesterday. He was hired last June on a two-year fixed contract with an annual salary of £380,000. He may receive one and a half times this amount in compensation.