Abbey to Focus on Core Business and Slash Costs
Stevenson, Rachel, The Independent (London, England)
ABBEY NATIONAL, the ailing bank, is to focus on its core mortgage business and slash costs after the slump in first-half profits that cost chief executive Ian Harley his job.
The bank will put more emphasis on its current accounts, banking for smaller businesses, credit cards and insurance services. Stephen Hester, Abbey's finance director, said: "We are shrinking the size of our wholesale business - which everyone will applaud - to focus on retail. That is what we do best."
Cutting costs is a major priority for the group, which did not rule out job losses from its administrative staff.
The finance director sought to reassure shareholders that the board was shaking off its old management culture, saying it would "look problems in the eye and avoid surprising the outside world."
The news may please shareholders angry at the group's management mistakes, but policyholders in the group's life insurance businesses are in line to have policy payouts cut.
Abbey, Britain's sixth-biggest bank, owns Scottish Mutual and Scottish Provident, as well as Abbey National Life. These businesses are very close to solvency margins and have been hurt by falling markets.
Mr Hester said unless markets make a substantial recovery, the company will have to follow the likes of Aviva and cut payout levels. …