Banker's draft

26 February 2003 By Chris Hughes

The UK bank has also quantified the bill for previous management’s decision to play the wholesale markets: £2.7bn. Now Abbey is returning to its retail roots. The idea is this will cut risk. Maybe, but it won’t eliminate it.

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Abbey National, the UK retail bank, posted a pretax loss of £984m and cut its dividend by 50% to 25.0p. The group took a £1.2bn goodwill charge, a £630m charge against its embedded value and registered provisions and losses of £902m in its troubled wholesale banking operations.

Luqman Arnold, the chief executive, detailed plans to focus Abbey on its core retail operations while managing all other business for exit. Work was underway to develop a model based on delivering better service and advice to customers, he said. A costcutting programme would deliver £200m of annual savings.

Capital released from the sale or closure of noncore operations is to be returned to shareholders.

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