Two years to turn around Abbey

Two years to turn around Abbey

Abbey National will take two years to turn around, its Spanish owners warned yesterday as they insisted they were making progress towards achieving their goal of making the bank the best on the high street.

Abbey, which is part of Banco Santander, had pre-tax profit in the first half of 2005 of £294m - unchanged on the same period last year - largely as a result of cuts to costs rather than growth in revenue.

Graeme Hardie, the new sales and marketing director hired from NatWest, said he had a hard task ahead of him.

"We are not just cleaning the surface of this car. We are working under the bonnet," he said.

"If Abbey was Arsenal we've been turning up to play Real Madrid with eight players and there's no way we are going to win," Mr Hardie said.

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Before joining Abbey, he conducted a mystery shopping exercise at the bank and found staff who were confused by their titles. As a result the "personal home finance advisers" have become mortgage advisers again.

The Spanish are also installing their red-flame logo in branches, which had been rebranded under the previous management team in an array of pastel pinks and blues.

On an internal video intended to explain the new refit, one staff member recalled how customers said the branches were like walking into "playgroups".

Francisco Gomez-Roldan, the chief executive, wants to reduce the cost-income ratio - a crucial measure of efficiency - from 63.5% to 42% by the end of 2007. It has been cut from 72% in the second half of 2004, and since then about 3,000 jobs have been cut, out of a planned 4,000.

Mr Gomez-Roldan insists the cost-income ratio can be boosted by revenue growth in 2006 rather than by more cuts. He expects to exceed his target to reduce costs by £150m this year.

Shares in Santander, which reported first-half profit of €2.55bn (£1.7bn), ended 1p lower at 691p in London.

Guardian Unlimited © Guardian Newspapers Limited 2005