Abbey National makes £144m loss
Abbey National today reported a pre-tax loss of £144 million for the first half of the year.
The bank announced that it was embarking on a full brand relaunch and a major overhaul of its products and services in an effort to turn the business around.
The £144 million loss compares to a pre-tax profit of £412 million in the first six months of 2002.
Abbey National reported losses of £984 million over the whole of 2002, its first loss since becoming a listed company, and announced that it would have to implement a restructuring plan.
The plan resulted in 1,000 job losses and the company is claiming that its cost savings plan has made good progress. It has delivered £46 million of costs savings in the first six months of 2003 and is expected to lead to annual cost savings of £125 million.
The bank announced that as part of its plans to cut costs, it is considering moving its telephone and processing operations to India.
The company stated that its personal finance unit made a profit of £588 million in the first six months of 2003 compared to £633 million in the same period a year ago. The fall was due to an 11% decrease in life assurance earnings.
Abbey National has been moving out of its non-core businesses as part of the restructuring plan, including corporate lending and wholesale banking activities, which provides lease financing for cars, trains, planes and power plants.
It has already seen a 57% reduction in its non-core assets from £60 billion to £25.7 billion. The bank believes that it will have sold all of its non-core business assets by the end of 2004.
Luqman Arnold, Chief Executive commented, ‘2003 is about putting the foundations in place to deliver the Abbey National of which customers, employees and shareholders can be proud. We are in the early stages of a process that will take 3 years. This will include de-risking and fundamentally re-engineering the business, and strengthening our relationship with our customers in order to have a solid platform from which we can deliver growth and rebuild shareholder value.’
