Abbey National's main business may be helping people to buy their own homes, but yesterday the company revealed it has moved its 1,037 properties into the rented sector.
The company, which has underperformed the British bank stocks by 16 per cent this year, sold almost all its branch network and other business properties for �457 million and arranged to lease them back from Mapeley Columbus, a company with links to the international financier George Soros and British property firm Delancey Estates.
Mapeley will acquire all of the Abbey National Group's property, both freehold and leasehold. There are 424 freehold and very long leasehold properties and 883 leasehold and transferring liability properties.
Abbey National has said that the move will lead to a pre-tax profit of �70 million. These profits will be reported as part of 2000 full-year profits.
The deal, which is the largest structured sale and leaseback deal of its kind in the private sector in the UK, will give Abbey National a lot more long-term flexibility.
The 20-year contract with Mapeley has been divided into bands, some of which allow Abbey to decide if it still wants to rent certain properties after as little as a three year period.
A spokesman for Abbey National said: "The Abbey National headquarters have longer lease periods, but a lot of our buildings, especially the branches, need to move, and the deal gives us the flexibility to do that".
The bank also said that another long term benefit of the deal is that it will reduce the company's exposure to property risk.
Mark Pain, the group finance director said: "This is a landmark transaction for us. It will deliver significant long-term value to our shareholders and is yet another example of how the Abbey National Group is innovating to maintain and increase efficiency in its business".
The deal is part of Abbey National's continuous efforts to leverage its branch network, which includes signing a deal with Costa Coffee, in which, the group says, customers can go into their local branch and order three tenners and a cappuccino".
A branch was opened yesterday in Kings Road, Chelsea. The branch has been completely refurbished and the sound of cash tills will now be complimented by the clatter of coffee cups and the steam of espresso machines.
The new branch features all the usual banking services, as well as a Technology Assist area, where Abbey National's digital television and banking services can be demonstrated and used by customers.
Yesterday saw a host of entertainment at the branch, including models on Vespa scooters, pavement artists, free coffee and freebies like mouse mats and balloons.
Other Costa branches are soon due to be opened in Bath, Croydon and Leeds and the bank hopes to have as many as 50 new-style branches by the end of 2000.
Andrew Pople, the managing director of Abbey National Retail, said: "The whole look and feel of the branch is refreshingly different from any other high street bank. The aim is to make bank branches attractive places to visit and browse."
Abbey National's share price was up 12.5 pence at 877.5 pence by closing yesterday.