First National Bank UK
Abbey National has decided to sell First National, its consumer credit business, for an estimated £800m.
The planned disposal represents a sharp reversal of its previous strategy and shows just how far the group's fortunes have slumped over the past two years.
The bank has appointed Morgan Stanley, the investment bank, to handle the sale. A select group of potential bidders, including major banks such as Barclays and Lloyds TSB, are thought to have been contacted in the past few weeks.
The First National sale is the most important element in a plan put in place by Lord Burns, the relatively new chairman, to dispose of non-core assets and scale back its troubled wholesale banking business. Abbey wants to get back to basics, to concentrate on mortgage lending and other retail financial services.
The move comes after a dreadful 12 months which saw Britain's sixth largest bank write off £272m in investments, including a £95m exposure to Enron, the collapsed energy trading giant.
In July, Ian Harley resigned as the bank's chief executive after months of pressure from disgruntled shareholders. Lord Burns, the former permanent secretary at the Treasury who became executive chairman when Harley resigned, is still hunting for a new chief executive. He is thought to be closing in on his target.
First National has a loan book of £9 billion, more than 4m customers and provides secured and unsecured credit to consumers under deals with 10, 000 businesses. The credit agreements typically allow customers to buy consumer goods such as holidays, personal computers, furniture and cars.
In 2001, First National made a pre-tax profit of £92m. Bankers believe the business could be worth £800m based on the industry standard for credit businesses of around 10 times post-tax profits.
First National has three main businesses. Tricity Finance is the UK's biggest provider of credit at the point of sale through retailers and has around 2.5m customers.