Although it was confident after a strong start to the millennium, the second quarter was rockier, with the collapse of Enron and the resignation of two top executives. Gareth Jones, head of Abbey’s wholesale division left the company, and its chairman, Lord Tugendhat, retired at the end of 2001.
The post of group finance director was abandoned as chartered accountant Mark Pain took over at the helm of the wholesale division. The post of chairman was given to Lord Burns, and all eyes will be on him as he takes up the reigns at the end of the month. Investors were cheered by Burns’ appointment, confident in his vast experience, which includes vast experience at the Treasury during the last recession.
Burns was chief economic adviser of the Treasury in 1980 and served as permanent secretary to the Treasury between 1991 and 1998. Most recently, he chaired the parliamentary financial services and markets joint committee in 1999.
One City analyst said: ‘All eyes have been on Abbey’s management for some time, especially as the bank is remodelling its wholesale banking unit with the position of finance director still vacant.’
And it was the wholesale division that took the biggest hit from the collapse of Enron. The energy giant owed Abbey National about £115m, and the bank expects to lose £95m in its second quarter from the collapse.
Although the retail sector is on the right track, with 45% more current accounts opened by the end of November, the other sectors are a cause for concern.
Financing subsidiary First National expects profits to be 60% lower than last year, hit by market conditions in the retail and motor industries.
The life assurance division is also expected to fall below last year’s levels as it struggles to integrate the newly acquired Scottish Provident.
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