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SOROS FIRM BUYS ABBEY BRANCHES.
Guardian
20 Oct 2000
By Christmas you could bank at a Carphone Warehouse.
Abbey National yesterday made a �70m profit by selling its branches and other properties to a company linked to George Soros, the financier who famously forced sterling out of the European exchange rate mechanism.
Under the terms of the �457m deal, Abbey National immediately leased back the properties, including its head office which shares the Baker Street address of fictional detective Sherlock Holmes.
The bank insisted the transaction, leaked out to the City earlier this year but only sealed yesterday, was not a precursor to branch closures.
However, Abbey said the transaction with property group Mapeley Columbus would give it more flexibility to move its branches. The bank has outlets in Safeway supermarkets and yesterday opened its second branch in a Costa Coffee shop, on the King's Road in Chelsea. By Christmas the bank intends to be sharing premises with Carphone Warehouse.
Abbey has transferred the management and ownership of its properties to Mapeley Columbus for 20 years. Mapeley Columbus is owned by Fortess Investment Group, Soros Real Estate Partners and Delancey Estates.
Mike McNamara, a partner at the Ernst & Young real estate group, which structured the deal, said this was the first transaction of its kind for a public company. He predicted other firms with large property portfolios might follow suit.
The transaction means that Abbey will be able to vacate premises early or extend leases more cheaply than in the past because Mapeley Columbus carries the risk associated with the 25-year - or longer - contracts.
Mark Pain, Abbey's finance director, said that while the bank had made a �70m profit on the sale, which will be reported in its 2000 profit figures, the longer-term benefits were more important.
`We have taken a major step towards being able to alter, radically if required, our property requirements in order to meet our future business needs.' Forty of the branches are no longer even run by Abbey, af ter it franchised them to their existing management. At the end of this month it will extend the franchise pilot to another 19 branches in Belfast, Brighton and Brent Cross. Under the franchise arrange ment, Abbey continues to employ the staff and management but gives them greater power over decisions and links their pay to their performance.
The shares rose by 15p to 880p.
GUARDIAN 20/10/2000 P27
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