The FT reports that the Abbey National has warned that it will post its first ever loss next year as it will be forced to make 'substantial' write-downs in respect of its wholesale banking business. The dividend will also be cut.
Merrill Lynch analysts feel that additional provisions at the wholesale banking operation could be as high as £750m. The write-downs will relate to bad investments and debts.
The bank now has a new Chief Executive, Luqman Arnold, and has confirmed that it is to now focus on its core mortgage, retail and wealth management businesses. There are fears that hundreds of jobs are likely to go at the wholesale bank as the Abbey restructures and attempts to return quickly to profitability.