Abbey National is reviewing its private equity fund-of-funds portfolio following a substantial fall in profit before tax for the six months to June 2002. The bank will reposition the business and will make substantial write-offs this year relating mainly to private equity, cable and telecoms exposures and high yield securities. A decision has been made to cease all new investments in the private equity sector, against an uncertain US economic backdrop.
Abbey National’s fund-of-funds business has been going since the mid 1990s and has some GBP800 million under management in funds which invest across the board in both Europe and the US. Matt Young, a spokesperson for the bank, said the majority of investments in Europe are performing well and it is commitments in the US that are most likely to be written off. He added that no further investments will be made from the fund. “We are comfortable with the way the portfolio is performing, but the private equity business no longer adds value for our shareholders and doesn’t fit in with our strategy for growth,” he said.