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UK: BUSINESS - SOROS BANKS ON ABBEY PROPERTY
Observer
27 Aug 2000
THE BILLIONAIRE financier George Soros is close to scooping Abbey National's property portfolio, including its entire branch network and head office, for �450m.
The Mapeley consortium, backed by Soros Real Estate Partners, is one of two short-listed parties to buy Abbey's property in a PFI-style deal.
Abbey will transfer its entire estate, including its Baker Street head office in central London and other main offices in Bradford, Glasgow and Milton Keynes plus its 750-branch network, to the winning bidder, who will have to oversee Abbey's HQ relocation to a huge new office near Euston Station.
The bank will then pay whoever wins the contract rent and fees for facilities management. Abbey maintains there will be no branch closures as a result.
Insiders say Soros is favourite to win the contract. If he does, it will confirm him as one of the biggest owners of UK property. Earlier this month, the Mapeley consortium, formed specifically to bid on Public Finance Initiative-style projects and which includes Jamie Ritblat's Delancey Estates, won a �2 billion contract to run 600 Inland Revenue and Customs & Excise buildings.
Soros's rival for the Abbey contract is a consortium consisting of US bank Morgan Stanley Dean Witter and the quoted property group London & Regional. A final decision will be made next month.
Other banks - including Lloyds TSB, Barclays and Halifax - may seek to copy Abbey's outsourcing tactics. Banks need cash to fund capital-intensive internet ventures. Other organisations, including the BBC, also want to release capital tied up in property.
Abbey, one of Britain's biggest lenders, is considering other ways to cut costs. It is now piloting a branch franchise scheme, under which branches could be handed over to local managers. If this scheme is spread to its entire network, it could remove millions of pounds from the bank's running costs.
Soros, based in New York, is most famous for being the man who forced the ignominious exit of John Major's Conservative government from the European Exchange Rate mechanism in 1992. The financier made at least �1bn in the process. But Soros funds have recently suffered losses from investments in technology stocks.
OBSERVER 27/08/2000
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