Abbey National life arm survives takeover

The new Spanish owners of Abbey National will not be selling off its troubled life-insurance arm, despite speculation that they were keen to get rid of the costly operation.

In a restructuring of the high street bank - which includes the departure of Mark Pain, the customer sales director, and Yasmin Jetha, the IT director - Banco Santander Central Hispano said that it was forming a new division that would include the life-insurance arm.

Head-hunters have been appointed to hire an executive from outside the bank to run the division, which will include Abbey's two closed with-profits funds, Scottish Mutual and Scottish Provident. Abbey said: "This draws a line under the speculation that Abbey will be selling off its life operations."

About 3,000 Abbey employees who face redundancy as a result of the takeover have yet to be identified, but some are expected to come from the division run by Ms Jetha.

Less than two weeks after taking control of Abbey, Santander said Mr Pain, 43, had "decided to leave", while Ms Jetha, 52, had been made redundant as a result of the restructuring. Mr Pain will leave at the end of March after 16 years with Abbey, including a stint as finance director, and will receive payment in lieu of his contract of about £650,000. Abbey said his departure was not connected to the restructuring, but was because he wanted "to move on to something new".

Ms Jetha's redundancy is caused by the creation of a manufacturing division that will incorporate IT and will be run by an existing Abbey director, Tony Wyatt. She will leave at the end of the month with a redundancy payment of £400,000 for her 19 years of service.

Santander also revealed that a previous Abbey non-executive, Keith Woodley, would join Abbey's former chairman, Lord Burns, on the new board.

The new Abbey chief executive is the Santander banker, Francisco Gomez-Roldan, who said the restructuring was necessary to "accelerate Abbey's turnaround plan".

"Abbey has the potential to be one of the most efficient and profitable banks in the UK, and the new structure is a decisive first step towards achieving that goal," he said.

Juan Inciarte, the Santander executive who spearheaded the takeover, is joining the new board in a non-executive capacity.