Abbey National may cut more jobs to be competitive |
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Wed, 26 Oct 2005 09:05
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LONDON: Abbey National, the U.K. bank acquired by Spain's Santander, may resort to job cuts again even as it is planning to enter riskier lending business with a view to improve performance. Santander, however, clarified the job cuts may not be of the magnitude carried out earlier this year, when some 4,000 jobs were lost.
However, analysts following the bank said some 2,500 jobs could go as Santander is keen to bring Abbey's overheads in line with other banks in the country. Around 200 million pounds can be saved from the restructuring, twice the amount expected by Santander when it acquired the bank for 9.5 billion pounds in November last year.
The bank's union, Abbey National Group Union, expressed disappointment and said it will make representations to the bank's officials.
Abbey's chief executive Francisco Gomez-Roldan claimed the bank had made progress in its revamp, but is yet to meet the sales and efficiency targets set at the time of the acquisition. Santander had wanted to cut the ratio of the bank's costs to its income to 45 per cent by 2008 from 63 per cent now and 70 per cent before. Abbey's gross mortgage lending had reached 8.1 billion pounds, an increase of 21 per cent over the previous three months, while its market share had improved to 10 per cent.
The bank is now planning to enter markets such as buy-to-let, new-build and sub-prime mortgages. It is also wanting to extend its operations to areas like current accounts, unsecured loans, investments and pensions, consumer finance and business banking.
Abbey had contributed 492 million euros to Santander's profit in the first nine months of the year, with net interest income at its personal financial services business higher in the latest quarter compared to a year ago.
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