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Previously known as Abbey National.

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Introduction

Abbey History Abbey is a bank that was formed in 1944, following the merger of the Abbey Road Building Society and the National Building Society. Previously known as Abbey National, it changed its name in 2003, unveiling a new look and announcing their intention to "turn banking on its head." It is the sixth largest bank by assets in the UK, providing personal financial products and services such as mortgages, banking, general insurance and life assurance. Abbey is also involved in Commercial Banking. It employs around 26,000 people, and has about 1.8 million shareholders.1 Mission Statement and Strategic Objective Every organisation has a mission, a purpose, a reason for being. A popular view of a mission statement is that it should be no longer than a single line, and should be easy to understand. The mission should be the brand. This seems to be a policy that Abbey has followed. Their mission statement reads "to be number one for number one." The number one provider of Personal Financial Services to each individual (themselves being their own number one). It is short and simple, and easy to memorise. This mission statement provides a direction for Abbey. ...read more.

Middle

Executives, in general, receive more rewards for an increase in the firm's size rather than for the growth of earnings, and as such, may recommend strategies which will accomplish this. That is what Gareth Jones did. However, this was not consistent with the image of a UK mortgage lender, and Abbey were forced to cover the portfolio with over �2 million. However, shareholders normally want to maximise earnings, and the failure of the wholesale bank, as well as the subsequent capital that went into covering it eventually resulted in a loss of �686m was exasperating to stakeholders, and Gareth Jones, and the chief executive, Ian Harley left Abbey. Adverse selection was also a problem for Abbey. The wholesale banking illustrates this. The shareholders did not fully understand how the wholesale banking works, and thus, did not realise the priorities of the head of the wholesale bank. This resulted in both shareholders and the chief executive losing out. Stakeholders Abbey have five main stakeholder groups- customers, shareholders, business partners, employees and the wider community. Their influence and power differ, as can be seen in a stakeholder map.6 Communication with stakeholders has recently been a feature of the Abbey strategy. ...read more.

Conclusion

They see it as downsizing and taking jobs away from Britain. Recently, eight executive directors of Abbey have been paid �2.8 million made up of cash bonuses and shares between them, at a time when the company has suffered massive losses. The bank's staff got an average of about six percent of their salary as a bonus last year, which was a rise of two percent from a year earlier. A member of the ANGU, (Abbey National General Union) said "Staff were very pleased with the bonus that was paid out in a difficult year. However, in light of what management received it wasn't very much". This could lead to further problems in the future. Conclusion Abbey are still in the middle of a three year turnaround, so are asking their stakeholders to bear with them. But with the massive losses, and the seeming disregard for employees, shareholders and customers alike, they may find that it will take longer than three years to have their strategy. APPENDIX A: 1 http://www.abbeynational.com/home/group_info/group_info-key_facts.htm 2 Strategic Management: Formation, Implementation and Control. 7th Edition. Pearce and Robinson 3 See Appendix 4 See Appendix 5 http://www.erisk.com/ResourceCenter/Operational/AbbeyLeftToRegretPoorComm.asp?link= 6 See stakeholder map, appendix 7 Financial Times 27/02/2004 8 http://www.abbeynational.com/home/shareholder_centre.htm 9 Royal Bank Of Scotland Annual Results Report 2003 10 Abbey employment review Jacqueline Spelman BHEB4 1 ...read more.

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