The Abbey axe is not quite poised to fall
Matt Young at the Abbey said the rumour machine had been rife ever since the bank announced its interim results in July and made a commitment to look at its cost base. “That exercise is still on going,” said Young, adding that nothing was been ruled out, including outsourcing some of its back office and IT services.
A record of failed mergers and a poor City performance led to the demise of Ian Harley as chief executive of Abbey National on 19 July. His ousting was sudden but not unexpected and came a week before the Abbey posted half-year pre-tax profits of £697 million – down by one third on last year.
The problem was that Abbey had to write off £450 million on a US junk bond just weeks after insisting that there were “no blackholes” in its balance sheet.
Last November Abbey lost £95 million in the collapsed Enron debacle but Abbey’s reliance on its treasury division’s performance had been in question for some time. It had been led by Gareth Jones, a one -time contender for the chief executive’s role. He departed last October. On the day preceding Harley’s departure, Alex Braun, director of funding and asset management, and Paul Caldwell, head of asset-backed securities, were made redundant.
Abbey’s chairman, Lord Burns, has taken over the role of chief executive for the time being and he sees a sharper focus on the group’s core activities in the financial services sector and a stronger control of costs as the way forward.