Fresh jobs threat as Abbey eyes growth

Published on Wednesday 26 October 2005 01:22

BANKING group Abbey's new Spanish owners yesterday issued "aggressive" new targets for revenue growth over the next three years, but at the same time warned more jobs would be cut from the British subsidiary on top of the 4,000 that have gone this year. Abbey chief executive Francisco Gomez-Roldan said the cuts would "not be of the same magnitude", but would not be drawn further.

Abbey's staff union ANGU said it was "hugely disappointed" about the implications for its members and that it would be meeting management in the near future to discuss the further layoffs.

It came as Santander revealed that it expected Abbey to grow revenues 5 to 10 per cent annually in the next three years.

Gomez-Roldan said areas to be particularly targeted would include bank accounts, unsecured personal loans, business banking and motor finance.

Emilio Botin, Santander's chairman, said: "We expect to achieve a 10 per cent market share in new bank account opening and double our share in personal loans and business banking by 2008."

The plan was unveiled as it was also announced that Abbey contributed 337 million in attributable income to its Spanish parent company in the nine months to September 2005.

Abbey's contribution escalated throughout the year, with 106m in Q1, 114m in Q2 and 117m in Q3.

Abbey's plans for Scottish Provident in Glasgow were less ambitious, with officials saying the strategy was more about holding market share than sharply increasing it.

ScotProv currently has a 16 per cent market share with the intermediaries market, and 9 per cent in the branch network.

Gomez-Roldan said: "Scottish Provident has a good presence. It is a very competitive market, but we will defend our market share."

On the Abbey costcutting front, he said that the company had already taken 200m of the 300m it had targeted off the costbase over three years in the first year of ownership.

It also emerged that the €675m (457m) of restructuring costs associated with the Abbey could be entirely covered by the €717m sale of Santander's 2.57 per cent stake in Royal Bank of Scotland earlier this year.

Gomez-Roldan said that, although much had been achieved with the Abbey integration, there was still a long way to go.

He cited the fact that sales per mortgage adviser were 25 per cent below the average of Abbey's peer group, and added: "Our relationships with customers are not strong, they are still weak."

He also said in the mid-term Santander wanted to bring down Abbey's cost/income ratio from a current 63 per cent to 45 per cent.

Santander's net attributable income in the nine months to September rose 36.8 per cent to €3.88bn, based on a strong performance in the retail business in Latin America and Europe.

Key factors

• Abbey trading profit before tax Jan-Sep - 617m (454m Jan-Sep '04).

• Santander says: "18 million customers and strong brand, but weak customer relationships."

• Strong positions in three markets: mortgages, savings, and life protection.

• Need to grow bank accounts (6.5 per cent market share), unsecured personal lending (5 per cent) and investments and pensions (2.2 per cent).