Abbey accelerates job cuts

ABBEY National today unveiled plans for a further 1,000 job cuts this year as new owner Banco Santander signalled a deeper shake-up at the bank, which it took over last year in a £9bn deal.

Abbey said it now plans to shed 4,000 roles by the end of this year, an increase on the original target of 3,000. In a first quarter trading statement, the company said that 1,000 people have already left the business.

The reorganisation, which has already seen 2,400 roles removed from the business, is intended to result in an increase in the number of customer-facing staff in branches but an elimination of back-office accountants and administrators.

An Abbey spokesman said the group needed to reduce overheads as its cost-to-income ratio of 62% was much higher than the 40% achieved by High Street rivals.

Abbey's new owner is looking to revive the business after a period of heavy losses, including a deficit of £984m in 2002. It is pushing ahead with another rebranding at Abbey, the second that the banking chain has undergone in less than two years.

Trading forged ahead in the first quarter. Abbey said it had made a positive start to 2005 with revenues stabilising and trading costs £20m lower than the same period a year earlier. Gross mortgage lending during the quarter hit £5bn, £1.7bn below last year's figure for the same period, highlighting the slowdown in the property market.

Despite the fall, Abbey's share of the mortgage market was at its strongest for 15 months at 8.8%. Credit card openings and gross unsecured lending were both well up on the comparative period in 2004, while bank account openings were consistent.

Chief executive Francisco Gomez-Roldan said: 'It is too early for the changes we are making to have had any meaningful impact on sales performance, but the first quarter results nonetheless include some encouraging early signs.'

'Mortgage approvals are improving, with our overall share of approvals better than at any point in the last 15 months. The turnaround in savings inflows, credit card openings and unsecured personal loan sales is also increasing.'

In February, the UK bank reported annual pre-tax profits of £273m, despite £564m of restructuring charges. This compared with losses of £686m in 2003.

First quarter profits at parent Santander, meanwhile, rose 38.5% to €1.19bn. The company said profits would have been 20.6% higher without the inclusion of Abbey.

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