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Abbey profits and deposits rocket as savers seek safe haven

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  • Abbey profits and deposits rocket as savers seek safe haven


    Abbey, the Spanish-owned high-street bank, said yesterday it had taken a 70% increase in deposits as savers looked for a safe haven from the financial turmoil.
    The bank said profits rose 20% over the past nine months to £737m as the perceived steadying influence of Banco Santander, which bought the bank for £8bn four years ago, attracted savers and mortgage customers.
    More than £4bn of deposits poured into the bank compared with £2.5bn last year.
    The figures follow the sale earlier this week of the train-leasing business Porterbrook for a reported £2bn to a consortium of rival banks.
    Abbey shrugged off concerns that the sale pointed to a need for extra capital and that its Spanish parent was struggling to cope with the global recession, saying that the deal allowed the bank to focus on its retail operations.
    Abbey's chief executive, António Horta-Osório, welcomed the government's £37bn bank bail-out plan but said Abbey "won't be using it".
    He said: "We had strong deposit inflows demonstrating that Abbey, backed by the strength of Santander, is regarded as a secure and trusted home for UK savings customers."
    Santander, which has climbed rapidly to become one of Europe's biggest banks, recently bought the ailing Alliance & Leicester and the savings business of the nationalised Bradford & Bingley.
    The deals give it about 1,300 high-street branches and deposits of £116bn, making it the UK's third-biggest deposit-taker behind Royal Bank of Scotland and the soon-to-merge Lloyds TSB and HBOS.
    It has picked up a large proportion of borrowers shopping for mortgage deals after their lenders were forced to curtail operations. The bank has insisted it has cherry-picked new business to avoid customers who might fall into arrears, but some analysts said they feared escalating arrears across the industry could also catch out Abbey.
    Its share of net mortgage lending has declined from 42% in the second quarter to 28% in the third, but remains above last year's level of 11%.
    A report by the Financial Services Authority showed a 71% rise in repossessions in the second quarter of the year. A report by the Bank of England estimated that about 1.2m households could fall into negative equity if house prices continue to fall over the next few years.
    Abbey said its finances were secure, with about 60% of its balance sheet coming from customer deposits, and less than 10% of funding from wholesale markets.


    guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds

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