Abbey to shed '1,000 to 2,000' more staff

Published on Thursday 9 February 2006 01:08

UP TO 2,000 more workers at the Abbey banking group will be made redundant on top of the 4,000 who have already gone, its Spanish owners said yesterday.

The news came as Banco Santander, which bought Abbey for 9.5 billion in late 2004, revealed that the UK bank had bounced back into the black last year, with a pre-tax profit of 596 million, compared with a 21m loss the previous year.

Francisco Gomez-Roldan, chief executive of Abbey, said there would need to be more cost cuts on top of the 224m realised.

Gomez-Roldan said: "Our trading cost-income ratio is higher than our competitors'. It is down to around 60 per cent. The competition is at around 50 per cent. We will be continuing to reduce costs and that will have some impact on employees in 2006, but a much lower impact than in the previous year. The number will be between one and two thousand."

He would not specify where the new job cuts would be. Abbey has nearly 2,200 staff at Scottish Provident and Scottish Mutual (now closed to new business) in Glasgow.

The bank has said before that it wants to expand in investments and pensions and rebuild its market share in the protection business. A spokesman reiterated yesterday: "We have no plans to sell our closed with-profits business."

Santander initially targeted cost cuts for 2005 of 100m. The lower costs combined with better-than-expected revenues, which increased slightly to 2.52bn in 2005 from 2.50bn in 2004.

Abbey's customer loans and retail deposits both rose 4 per cent in 2005, while mortgage lending rose 10 per cent to 27.6bn.

But Abbey said it increased the amount it set aside to cover bad debts by 54m last year, following "some modest credit quality deterioration" across the industry.

Abbey said it aimed to increase its net share of UK mortgages to 10 per cent by the end of this year, from 5.8 per cent in the second half of 2005.