Abbey to unveil higher wholesale banking losses
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Your support makes all the difference.Abbey National will this week unveil further huge write-offs in its wholesale banking division which are likely to leave the mortgage bank nursing losses of up to £1.5bn for the current financial year.
Luqman Arnold, Abbey's new chief executive, is likely to disappoint shareholders further by failing to outline his strategy for reviving the fortunes of the ailing bank or detailing its dividend policy.
The City has been eagerly awaiting Abbey's trading statement on Wednesday. But Mr Arnold, who was appointed last month following the ousting of Ian Harley, is understood to have told investors that he needs more time before giving details of the new long-term strategy.
One area where details are likely to remain vague is over Abbey's dividend. There has been speculation that the bank will slash it to conserve capital. Mr Arnold is only likely to give some guidance on the bank's attitude to the dividend.
Analysts believe he will announce a substantial increase in likely losses in the wholesale bank. One analyst said: "Abbey has said it expects losses of £190m in the wholesale bank in the second half. If Luqman kitchen sinks the problems in the division that could rise to between £500m and £700m."
Mr Harley was forced to quit in July after a series of heavy write-downs, including a £272m provision for bad debts at the wholesale bank. Abbey also warned of further bad debt exposure.
The City also expects Abbey to take a write down of about £1bn on its life insurance business, Scottish Mutual. Mr Arnold may disclose the hit now rather than wait until Abbey reports its full-year results in February.
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