BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Friday, 18 October, 2002, 14:28 GMT 15:28 UK
New Abbey boss facing tough task
Luqman Arnold
Will Mr Arnold be a "radical force for change" at Abbey?
Abbey National's new chief executive Luqman Arnold takes up his post on Monday knowing that he faces a major challenge in improving the bank's fortunes.

Abbey National share price graph
Abbey's chairman, Lord Burns, said Mr Arnold had a "proven track record in managing complex businesses facing challenging times".

It appears all that experience will be required.

The well-known High Street bank has seen its share price tumble this year, after an unsuccessful expansion into corporate banking hit profits.

And Abbey is currently fighting for its independence, having rejected two takeover offers in recent weeks.

Good reputation

Both the Bank of Ireland and National Australia Bank (NAB) have walked away from Abbey having had takeover bids rejected.

Luqman Arnold
Born: 1950 in Calcutta
Graduated University of London (Economics)
1972: Joined First National Bank in Dallas
1976: Joined Manufacturers Hanover Corporation
1982: Worked for Credit Suisse First Boston - rose to become head of investment banking for new business
1993: Joined Banque Paribas
1996: Moved to UBS

Mr Arnold's appointment is seen as strengthening Abbey's position, and the bank's share price dropped as the prospects of a takeover receded.

"He is a talented banker who can be both tough and uncompromising - qualities needed at Abbey National to drive through changes," said Tom Rayner, a banking analyst at Dresdner Kleinwort Wasserstein.

Mr Arnold worked at UBS between 1996 and 2001, latterly as the president of the bank's chief executive board, a similar position to that of chief executive.

He described himself as a "radical force for change" but left in December following boardroom differences over strategy.

"He had a very good reputation when he was at UBS," Richard Staite, a banking analyst at SG Securities told BBC News Online.

And despite the circumstances of his departure "investors still looked on him favourably".

"His appointment will be welcomed by [Abbey National] shareholders," Mr Staite added.

Future strategy

Abbey National has already said that it intends to return to basics and concentrate on its core mortgage and retail banking business.

Former Abbey National chief executive Ian Harley
Ian Harley: Resigned in July

But Mr Arnold will also have to work out how to turnaround the bank's troublesome wholesale banking division, although his background in investment banking is seen as a help.

Bad loans in this business led to Abbey issuing a profit warning earlier this year, and hastened the resignation of Ian Harley as chief executive a month later.

There are also question marks hanging over the future of some of Abbey's life insurance interests, and there have been reports that the bank is about to sell its First National consumer credit business.

"If they sell First National sooner rather than later it will be a good thing as it will strengthen its capital position," said Sarah Holder, banking analyst at Teather & Greenwood.

This may come as a relief to shareholders, following recent reports that Abbey might have to cut its dividend.

Staying independent?

Now that Bank of Ireland has abandoned its chase for Abbey, analysts think there is a fair chance the bank will retain its independence.

"There are very few people out there who are likely to take them on," said Ms Holder.

A hostile takeover bid by Lloyds TSB last year was blocked on competition grounds, and any other large UK bank is likely to face the same problem.

NAB has ruled itself out, and analysts think it unlikely that any European bank will launch a bid.

See also:

18 Oct 02 | Business
09 Oct 02 | Business
08 Oct 02 | Business
07 Oct 02 | Business
30 Aug 02 | Business
24 Jul 02 | Business
19 Jul 02 | Business
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes