But so far finance director Stephen Hester’s job appears safe. Hester is however Abbey’s first FD to preside over a loss by the UK bank since it demutualised in 1989.
Last week the bank said it would also cut its dividend and increase loss provisions in its troubled wholesale bank.
The UK’s sixth largest bank said 2002 profits would be wiped out by a series of charges, including further ‘substantial’ provisions in its wholesale bank, a write-down of goodwill on acquisitions and a #500m one-off charge for its life assurance arm.
Abbey is also set to take further charges for the introduction of new rules that require companies to book share options as an expense in the accounts. Hester has dismissed scaremongering that the bank’s businesses are ‘imploding’ and said the provisions would be ‘a prudent and necessary bringing into line of our business’.
Indeed he is upbeat saying the radical restructuring would protect Abbey’s independence. ‘We believe Abbey has an independent future and we will be the largest pure personal financial services provider in the country,’ he said.
Back in July, Hester was heavily tipped to be Abbey’s next chief executive when Ian Harley resigned after the bank shocked the market with a profits warning. He followed a number of directors who had already left the bank.
Hester was thought to have won favour in the City and, crucially, with Abbey’s influential chairman Lord Burns, after showing determination to cut costs and reshape the company around its core lending and mortgage business.
Sadly for him, he was pipped to the post by Luqman Arnold.
City analysts say Hester has shown flair since joining Abbey in May and won acclaim for imposing a more efficient system of risk management. He is seen as a possible deal maker, who could engineer a merger of Abbey with a foreign rival.
And this week he acknowledged Abbey could attract bidders in its new incarnation as a retail financial services bank. ‘We will become more attractive to a predator, but as we become more attractive, we will become more expensive,’ he said.
Hester joined the Abbey National board on 13 May 2002 as group finance director. He began his career in 1982, joining Credit Suisse First Boston after graduating in the same year from Oxford University with a first class honours degree in politics, philosophy and economics.
Between 1982 and 1986 he undertook various capital markets and corporate finance duties and was assistant to the chairman for a year. In 1991 he helped CSFB develop from being a predominantly capital markets-orientated firm in Europe into being top four ranking in the mergers and acquisitions league table.