Abbey poised to cut 2,000 jobs

Abbey National warned today that up to 2,000 jobs will be axed this year as the bank looks to continue its turnaround under Spanish ownership.

Abbey chief executive Francisco Gomez-Roldan said between 1,000 and 2,000 jobs will go following the 4,000 cut last year.

It came as the bank said its recovery was on track after it turned pre-tax losses of £21m (€30.6m) in 2004 into profits of £596m (€868m) in 2005.

Abbey – bought by Banco Santander Central Hispano in November 2004 for £9.5bn (€13.8bn) – said the further job cuts would help deliver a more efficient business.

A spokesman said: “The majority will be from the back office as we focus on the front end of the business. The majority last year were from the back office and that will be repeated this year.”

Last year’s cuts helped deliver cost savings of £224m (€326.3m) compared with initial expectations of just £100m (€145.7m).

When Santander took over Abbey, the British bank employed 24,500 staff. That was cut to 20,500 by the end of last year, with further reductions announced today.

The lower costs through staff cuts last year combined with better-than-expected revenues – slightly up from £2.5bn (€3.6bn) in 2004 to £2.52bn (€3.8bn) in 2005.

Trading profits before tax, which strip out the costs of restructuring the business under Santander, were up 34% to £775m (€1.1bn).

Mr Gomez-Roldan said: “Today’s results clearly show that we are on track in our efforts to turn Abbey around.

“We have exceeded our targets we set for 2005. We’ve made excellent progress in reducing costs across the business, and there are early but clear signs of sustainable revenue growth.

“We have set ourselves clear targets, and we will build on the momentum we have established in 2005 and expect further improvements in customer service and business efficiency in 2006.

“We’ve made a good start towards achieving our three-year turnaround and long-term goal of becoming the best retail bank in the UK.”

Customer loans and retail deposits both rose 4% in 2005, while mortgage lending lifted 10% to £27.6bn (€40.2bn).

But Abbey said it increased the amount of money it set aside to cover bad debts by £54m (€78.7m) last year, following “some modest credit quality deterioration” experienced across the industry.

Abbey said £12m (€17.5m) related to mortgages while most of the rest related to unsecured loans.

Santander recently unveiled plans to bring Abbey’s credit card operation back in-house – four years after it was outsourced in a £289m (€421m) deal.

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