£2m handshake for Abbey manager

ABBEY National has given the former head of its struggling wholesale banking offshoot a golden handshake of nearly £2m. Gareth Jones, who resigned suddenly from Britain's sixth-biggest bank last October after five years running the division, picked up a £1.1m severance cheque, plus nearly £800,000 in enhanced pension benefits.

His departure, after a 12-year stint, came amid growing concerns about Abbey National's wholesale lending business - loans to companies - and specifically its exposure to collapsed energy trader Enron and other high-risk borrowers.

Abbey maintained at the time that Jones's departure was amicable, though it is understood that he left amid disagreements over strategy.

Abbey also claimed that its wholesale banking business was 'in very good shape'. But the bank wrote off £64m in bad-debt investments for the first six months of 2001, when Jones was still running the business.

And it has since been forced to write off a further £192m against bad debts in wholesale banking, including a £95m exposure to Enron. It is also winding down its high-risk debt portfolio, which at one stage was thought to have been worth up to £2.5bn.

The revelations about Jones's pay-off are contained in Abbey's full-year report and accounts, published this weekend.

Jones, 53, who was on a basic annual salary of £385,000, began collecting his full pension immediately on departure. His £800,000 pension top-up represents three years' worth of contributions and was payable under the terms of his employment contract.

Abbey is now 'refocusing' its wholesale banking business under Mark Pain, who took over following Jones's departure. He had been group finance director.

Pain has been given the task of making sure Abbey makes less-risky investments, and is believed to have reduced the bank's high-risk debt portfolio to £1.3bn. The bank has yet to find a new finance director to replace Pain, but expects to name a successor soon.

Jones resurfaced at the end of last year as a non-executive director of Kensington Group, which specialises in mortgages for less creditworthy property buyers. A spokesman for Abbey said Jones's payout was 'totally in line with his service contract and was agreed by the remuneration committee'. He declined to comment further. Jones declined to comment.