I've been treated like Bin Laden

IAN Harley is rattled. A profits warning - just weeks after Abbey National said everything was tickety-boo - has sent the bank's share price spiralling downwards. And for days, its chief executive has been reading in the newspapers that shareholders' patience with him has run out. He is, it is said, living on borrowed time.

Sitting in his sixth-floor office in Baker Street, central London, Harley admits: 'It has been a painful experience. I seem to be getting a worse press than Osama Bin Laden.' And there may be more to come. Harley will this week set out on what promises to be a series of bruising one-to-one meetings with his top investors, some of whom could well demand his head.

But he suggests he will stay aloof from the criticism. 'Am I wounded?' he asks. 'Not personally. In most cases, the criticism is badly informed. I have a high-profile job and if you get kicked, you just have to accept that you get kicked.'

Harley is well-used to doing the rounds among investors, claiming to have notched up 110 individual meetings so far this year. 'There is nobody who spends more time with the institutions,' he says. But gritty as he is, Harley's manner suggests that, yes, the attacks by unnamed institutional investors have inflicted real hurt.

He snaps angrily in his broad Scottish accent at any suggestion that things at Abbey are even worse than has been disclosed. And there is even a tear in his eye as he reflects on the bloodthirsty language of sought-after revenge: 'Blood on the carpet, heads must roll, the need for a sacrifice - is it really necessary?'

In the eyes of investors, Harley must answer two charges. First, the bank has not exactly done brilliantly since he took over in 1998: the performance of Abbey's shares is 40% worse than that of other banks. And second, they want to know how Harley could have been telling them so recently that the business was trading in line with expectations, only to admit last week that it would write off up to £450m in its wholesale banking division.

Wholesale banking has been habitually troublesome for Abbey. Last autumn, it admitted that, yes, the division did indeed face problems. The redoubtable Gareth Jones - credited with building the division virtually from scratch - left amid rumours of disagreements over strategy. Shortly afterwards, Abbey disclosed a £95m loss on loans to bankrupt energy giant Enron, and wrote off a further £150m against the collapse in value of its high risk, junk bond investments. But Harley insisted there were no undisclosed black holes. Six weeks ago, he said Abbey's trading as a whole was in line with forecasts.

Then last Monday, the bank said losses on junk bonds, loans to the telecoms sector and failed venture capital investments had added about another £200m to the £250m that the City had been expecting in write-offs for this year.

Just to make sure that no investor was left with even the remnant of a smile, new finance director Stephen Hester warned that in future years Abbey was likely to be making substantially bigger write-offs and provisions than it has done before.

His arrival marks a decidedly conservative turn in Abbey's approach and, with previous finance director Mark Pain now running the wholesale division, the bank has tightened its approach to risk management. It will now think much more carefully before lending.

Harley believes that getting all the bad news out at once - something that a shocked City attributed to new boy Hester - was 'the right thing to do', even though 'the market doesn't like bad news any more than we like giving it'. Harley also clearly believes that the 'right thing to do' is to battle on as chief executive. 'If they haven't got me as a lightning conductor, they've got to find someone else,' he says. 'You don't get these jobs by walking away, you get them by taking it on the chin.'

He joined Abbey as a humble financial analyst in 1977, working his way up to the finance director's job in 1993. Five years later he became chief executive. He reflects that most chief executives end up leaving 'under a cloud'. But he adds: 'I'm not sure things would suddenly get better if I walked away.'

And he makes the harsh, but probably fair, point that fund managers who have lost money on an investment rarely blame themselves for getting their timing wrong. Their instincts will always be to try to find someone at the company to blame for poor share performance. 'It would be against human nature for fund managers to say ''Hey, I bought this stock at the wrong time'',' he says.

Harley is someone for whom contrition doesn't come easily. He admits that Abbey diversified from its core business and into wholesale banking 'at the wrong time in the cycle'. But he insists that the bank's woes are still largely the result of factors beyond its control. 'In terms of corporate bond defaults, it's the worst market for 50 years,' he says, 'and the economic backdrop in the past six weeks has certainly worsened.'

Harley plays down the prospect of Abbey National embarking on any acquisitions - though the bank has been widely tipped to be looking at Alliance & Leicester, the seventh-biggest mortgage lender.

But he makes it clear that expansion will have to be on the agenda at some point. 'We've been active acquirers and sellers of assets over the years,' he says. 'Of course, we'll do more in future.' Harley also knows he cannot go back. 'If we'd stayed solely as a mortgage bank, we'd have been seeing falling profitability, falling returns and a shrinking business,' he says.

But as things stand, all that is shrinking at the moment is the likelihood of Harley's own survival as Abbey's boss.