Two cheers for plan of Rock's would-be rescuer by Finance News Bulletin

Published: 14/12/07

Luqman Arnold may be a former chief decision-making of Abbey National but he has spent most of his career in investment banking and will have to induce the government his ambitions for Northern astound extend beyond a “quick flip” of the struggling lenderOlivant, his private evenhandedness firm, would take a 15 per cent stake in the lender and would entrust not to sell shares even after the store of England’s crisis loan to the bank was repaid in full in 2009He would become executive chairman in the first instance but then step up to be chairman after appointment of a leader executive, possible from within the companyThe proposal would give the government a 5 per cent bet in Northern Rock if the share price rose considerably

That means that if there were a takeover at a best, the UK taxpayer would share in some of the upsideSome scepticism about Mr Arnold’s long-term commitment to Northern Rock is understandable He decided the sale of the troubled Abbey National to Spain’s Banco Santander in 2004 less than two years after taking the helmBut he is quick to protect his achievements at Abbey and maintains it was never his strategy to sell the store

“You have to run an organisation for an independent future as you cannot guarantee that someone will want to buy it”, he says “We did the work at Abbey We stabilised it and left it in a stronger place In 18 months, we saved it

”He says, if anything, fitting Abbey was a tougher task than fitting Northern Rock, given the former’s complexity He has abundance of transferable experience The two banks share a alike culture, both being ex-mutuals His only regret about his plan at Abbey was a poorly executed rebranding campaign for the branch system

Will this be enough to see Olivant come first Northern Rock It starts on the back foot Sir Richard Branson’s Virgin collection has been appointed preferred bidder However, it does have two important compensation

The first is its suit has the backing of shareholders, some of whom have argued the Virgin suggestion leaves them short-changed Unlike Olivant, Virgin would buy a stake in the commerce at a discount to the current split price The UK Shareholders Association came out in vocal support the past on behalf of retail investorsThe second is Olivant’s investment is little enough not to count as a change of control, which income it could proceed much faster than the March to April schedule envisaged for Virgin

Otherwise, coffers officials say both proposals satisfy the government’s principles for a auction, the priority being protection of taxpayersThe obstacles to a deal are communal by both bidders The first would be that the Treasury succeeded in enticing JCplants, the US confidential equity firm, back into the auction

Above all, they require to find banks willing to commit firmly to refinancing Northern Rock: a job that gets harder by the day as the drip of retail depositors from the bank continuesMaverick China sum Profiles: Chinapay, Providing Online sum Solutions for Chinese Banks Maverick porcelain Research12/3/2007$1000Maverick porcelain Payment Profiles: 99Bill, Hot Out of the Gates, but Sustainable Maverick China Research12/3/2007$1000© patent The Financial era Ltd 2007 "FT" and "Financial era" are

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Final IT changes at Abbey - Published:13/12/07

All times are London time Search information in the FTcom siteSearchSearch Quotes in the FTcom siteQuotesCOMPANIES Financial servicesBreadcrumb follow navigation:FT Home > Companies > By sector > monetary servicesServicesEarly next spring Banco Santander, the Spanish bank, will come to an end one of the most determined projects ever undertaken in UK banking when it completes its integration of Abbey NationalIt is the conclusion of a three-year turnround plan unveiled when Santander bought Abbey, Britain’s sixth largest store, for £95bn in November 2004At the time the contract was by far the largest banking contract in Europe, and rival banks are surveillance closely for clues about what type of synergies can be achieved in cross-border dealsMuch of the success of the deal hinged on a fundamental overhaul of Abbey’s 30-year-old legacy IT system Santander argued it could cut Abbey’s expenses by switching its systems to the Spanish bank’s proprietary stage, called PartenonThree years on, Abbey has switched over 70 per cent of the bank’s IT systems to Partenon and the final give up is expected to be completed by next MarchAntónio Horta-Osório, chief decision-making of Abbey nationwide, likens the change to switching from an old truck to a Ferrari“This is probably the main ever systems change in banking and in the UK,” he says “It is done with the aspire of providing a substantial benefit to our customers leaving forward in cost per transaction”Before Partenon was even implemented, Abbey had already slashed its flabby cost bottom, flaking 9,000 jobs – far more than the 3,000 posts expected at the time of the dealIt has also achieved its original target of making £300m of cost investments six months ahead of schedule As a result its cost profits relation – a key measure of efficiency – has fallen from 70 per cent in 2004 to 50 per cent nowRevenues have also risen by 5-10 per cent between 2005 to 2007 and the bank’s 705 branches have been spruced up and incorporated the Santander logo“I say we have to put ourselves ambitious objectives otherwise we will never meet them,” says Mr Horta-Osório a famous Portuguese banker who worked at Citigroup and Goldman Sachs before amalgamation Santander in 1993Though Santander has slash costs at Abbey, it has done so largely through a greater height of redundancies than expectedSantander expects to reap further benefits and an strengthen in revenues by introducing Partenon in the UK but it is still not yet clear that this will create operations more efficientThe new Partenon system surely allows Abbey to process transactions more quickly It also gives branch staff better sales tools Its solitary database lists which products each client has – making cross-selling much easierbefore Abbey’s old IT systems had several different databases with duplicated details of customers making this cross-selling almost not possibleAbbey admits, however, that there have been teething troubles with its implementation of Partenon and a small number of clientele have suffered “some delays”Mr Horta-Osório says: the majority of those issues are related to the legacy systems in Abbey that still have to be connected to Partenon“It’s similar to if you have a Ferrari and you have a rope tied to an old means of transportation and you cannot get the rope until the Ferrari has all the populace on board that were on the truck”Mr Horta-Osório believes Partenon will force revenues at Abbey pointing to the knowledge at Totta, the Portuguese bank that was acquired by Santander in 2000 It was his job to implement the Partenon IT system into Totta and turn the store aroundAt the occasion Totta had a cost income ratio of 53 per cent – above the sector average – and it had 7 per cent split of the country’s profit pond Mr Horta-Osório slashed the cost base by 10 per cent and almost doubled net profit to €340mHe says: “Five years later we had a cost to income relation of 40 per cent and from 7 per cent of profits of the state we went to 14 per cent – we doubled it in five years very similar to what we want to do here in terms of trends,” he saidThe key challenge is boosting Abbey’s enlargement The bank has 18m clientele but 8m of these are classed as inactive and 11m take only one of the bank’s products They have a inferior percentage of their banking relationships with Abbey than do customers of high street payment banksAbbey’s three-year plan envisages shrugging off the bank’s inheritance as predominantly a mortgage and savings bank in order to take on the UK’s five biggest banks in areas such as present financial records, mutual funds and business bankingAs a result, Santander expects Abbey, which had been losing market share in recent existence, to continue to raise revenues by 5 to 10 per cent by 2009Mr Horta-Osório says: “We are persuaded we have a lot of organic potential in front of us We comprehensive our public commitment of growing revenues from 5 per cent to 10 per cent a year until 2009”A input way for Abbey to get together its targets is to drive up the number of products it sells to obtainable customers – helped by the up to day information from Partenon – whilst maintaining its inferior cost baseIf Abbey drives up cross-sales by 25 per cent, then this could give 2-3 percentage points of additional income growth over the next five years Abbey aims to do this by using its bough employees and is planning to augment its 705-strong network by a further 300 branches by 2010To this end it has distorted the way it is remunerating branch staff so they are incentivised in a different way to expand investments and investments on a net basisIt is also leveraging Santander’s worldwide know-how to develop new products in areas such as mutual money, insurance and credit cards It is expanding its offering in business banking and aid to wealthy customersLast year, for example, Abbey severed an outsourcing contract with US credit card issuer MBNA and brought its credit card process back in-house using Santander’s global know-how in cardsFrom selling 3,000 cards a week in mid-September through its bough network it is now selling 12,000 cards a week “That is an instance of how we can increase our cross-sales,” says Mr Horta -OsórioMr Horta-Osório also believes Abbey is well positioned in the praise squeeze known it has been reining back on mortgage lending in the cut-throat mortgage market for the past day and has been driving up investments and asset managementAbbey, which has a 94 per cent share of the in general UK mortgage market, now aims for mesh new mortgage lending of between 6 per cent and 7 per cent – although it expects to be at the upper finish of its net lending target by the year endHe also stresses it has little reliance on the wholesale markets in conditions of short-term financial support Around 60 per cent of financial support is provided by sell deposits“In terms of liquidity we have less than 10 per cent of our retail assets financed by wholesale temporary funding which is much better than the average of the division we were prepared to an environment such as this,” he saysCopyright The Financial Times incomplete 2007António Horta-Osório, CEO of Abbey National – CV - Dec-09MPS defends €9bn Antonveneta contract - Nov-09Chairman exultant at quickfire contract - Nov-09MPS shares slump after Antonveneta deal - Nov-09Why overseas banks are battling for Italian assets - Apr-11Credit squeeze will not strike Santander lending - Oct-26More from this sectorMaverick China Payment Profiles: Chinapay, as long as Online sum Solutions for Chinese Banks Maverick China Research12/3/2007$1000Maverick China Payment Profiles: 99Bill, Hot Out of the Gates, but Sustainable Maverick porcelain Research12/3/2007$1000BlogsBrussels BlogCharles PretzlikClive CrookDear LucyEconomists’ ForumEnergy FilterJohn GapperGideon RachmanTech BlogThe in secret EconomistWestminster BlogWillem Buiter’s MavereconRegional pagesLatin American agendaChinaIndiaBrusselsInteractivePodcastsDebates & pollsAsk the expertMarkets Q&AJobs and classifiedsBusiness for saleContracts & tendersJobs Search Type your look for criteria below:* Minimum delay 15 minutesAll era are London timeFT HomeSite mapContact usHelpAdvertise with the FTMedia centreStudent offersFT ConferencesFT SyndicationCorporate subscriptionsFT GroupPartner sites: Chinese FTcomLes EchosFT DeutschlandExpansionInvestors ChronicleExec-Appointmentscom© Copyright The Financial era Ltd 2007 "FT" and "Financial era" are trademarks of The Financial era Ltd.

Arnold plans £800m Rock rights issue - Published:08/12/07

All occasions are London occasion Search News in the FTcom siteSearchSearch speech marks in the FTcom sitespeech marksCOMPANIES Financial servicesBreadcrumb trail navigation:FT Home > Companies > By sector > monetary servicesServicesOlivant, the private equity group, moved to prod aside Virgin Group in the race to rescue Northern Rock by exactness an alternative diagram that would repay the government’s emergency loan to the anxious lender more rapidly and give taxpayers a stake in its recoveryThe proposal, fronted by Luqman Arnold, the former leader executive of Abbey National, would see Olivant invest £150m of evenhandedness in Northern Rock Up to £650m of evenhandedness would be provided by obtainable shareholders, £440m of which was already underwritten by investors scheming 23 per cent of the bankOlivant supposed its investors were “blue-chip” institutional investors and family offices At yesterday’s share price, Olivant would have a bet of around 15 per cent in the storeNorthern Rock last week named Virgin as preferred bidder but it continues to ask for offers for the corporation behind the scenes JC Flowers withdrew from the contest on Thursday, although the administration is thought to be looking for a meeting with the US private equity group to establish what it meant when it supposed it could come back if the “parameters” of the state of affairs changedOlivant would offer the government some defense against embarrassment if Northern astound staged a dramatic recovery and enriched its new private equity owners The Bank of England would take delivery of warrants giving it 5 per cent of Northern Rock’s evenhandedness if the share price rose substantially Olivant would receive the same warrants over 7 per cent of the companyThe Bank would also receive instant repayment of between £10bn and £15bn of the £25bn-plus of funding it has higher to Northern Rock since the sprint on the lender in mid-September, with the remainder expected to be repaid by 2009 Virgin is proposing to repay £11bn immediately, and the equilibrium by 2010Mr Arnold said he would not detail how his commerce plan facilitated the speedier refund of the Bank’s facility, for fear of handing an advantage to competitor bidders However, he indicated that Olivant would shrink the company“Ours is a earlier route to certainty,” he said “Northern astound could put [our management] in place before Christmas”He said initial repayment of the Bank’s ability would not be possible until February, when the European charge is expected to rule whether the government’s support for Northern astound could continue as designated restructuring aidOlivant would retain the Northern astound brand, and Mr Arnold would be decision-making chairman until the Bank was fully repaid He would recruit a chief decision-making, looking internally in the first instance, so that he could become a non-executive chairmanCopyright The Financial era Limited 2007Two cheers for plan of Rock’s would-be savior - Dec-07Lex: Olivant bid - Dec-07Flowers quits race for Northern astound - Dec-06Lombard: astound’s double danger to London’s reputation - Dec-06John Kay: Rock’s fate should not be a game of chicken - Dec-05In deepness: Northern astound - Sep-17More from this sectorMaverick China Payment Profiles: Chinapay, as long as Online Payment Solutions for Chinese Banks Maverick China Research12/3/2007$1000Maverick porcelain Payment Profiles: 99Bill, Hot Out of the Gates, but Sustainable nonconformist China Research12/3/2007$1000BlogsBrussels BlogCharles PretzlikClive CrookDear LucyEconomists’ ForumEnergy FilterJohn GapperGideon RachmanTech BlogThe in secret EconomistWestminster BlogWillem Buiter’s MavereconRegional pagesLatin American agendaChinaIndiaBrusselsInteractivePodcastsDebates & pollsAsk the expertMarkets Q&AJobs and classifiedsBusiness for saleContracts & tendersJobs Search Type your look for criteria below:* Minimum holdup 15 minutesAll times are London timeFT HomeSite mapContact usHelpAdvertise with the FTMedia centreStudent offersFT ConferencesFT SyndicationCorporate subscriptionsFT GroupPartner sites: Chinese FTcomLes EchosFT DeutschlandExpansionInvestors ChronicleExec-Appointmentscom© Copyright The Financial era Ltd 2007 "FT" and "Financial era" are trademarks of The Financial.

Abbey Mortgages: North-south divide widens for first-time buyers - Published:07/09/07

wwwmoneynewscouk > Abbey National > Abbey Mortgages: North-south divide widens for first-time buyersThe hole between house prices in the north and south for unparalleled buyers has escalated in the last ten years, Abbey Mortgages has claimedIn 1997, house prices for first-time buyers in London were 30 per cent higher than those in Liverpool and Manchester at an standard of £44,379Nowadays, Londoners looking to get on the property steps will spend, on standard, £186,025 - which is almost double what is paid in the north-westSimilarly, the dissimilarity in the amount borrowed by unparalleled buyers in London and the northern cities has increased from eight per cent to 31 per cent over the eraHowever, Nici Audhlam-Gardiner, Abbey head of mortgages, said that the widening has done little to dampen insist for first homes in the capital"Perhaps it shows that populace in the south want to pay money for now - expecting prices to continue increasing at a rapid rate, whereas buyers in the north feel they have less to gain in jumping on the property ladder"Abbey claimed last month that an increasing figure of.

Two cheers for plan of Rock's would-be rescuer by Finance News Bulletin

Published: 14/12/07

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Final IT changes at Abbey - Published:13/12/07

Arnold plans £800m Rock rights issue - Published:08/12/07

Abbey Mortgages: North-south divide widens for first-time buyers - Published:07/09/07