Abbey National is conducting a root-and-branch review of its corporate operations, including its social housing division.
An Abbey National spokesman said: "The Treasury services division – of which social housing is a part – is undergoing a huge review. We are looking to focus purely on UK personal financial services."
The review comes after a series of unsuccessful investments made by the bank's wholesale division; they are expected to result in loss provisions of up to £750m.
The bank's spokesman said any sections of the bank considered surplus to requirements would be grouped in a "business portfolio unit" while their ultimate fate was decided.
Any business in the unit could face a "wind-down over several years or a sale", he said, although he stressed that no decision on the social housing sector had yet been taken.
It is thought likely the social housing team, led by Rita Jobbins and Mike Dudman, will be realigned with the personal finance division.
In the meantime its lending business will continue as normal.
An industry source said: "There is a question mark over them, although they had lent more than £3bn to the sector by March last year, so it is a significant business for the bank.
"£3bn is a large amount in social housing terms, but it is small in retail banking terms. What may be in the social housing team's favour is their small team and lower cost base."
A different source at a rival bank pointed out that Abbey National's social housing team had been "pulling out all the stops" recently in an attempt to secure new business.
He said: "Abbey has recently been more aggressive in going after new business. It could well be the case it is trying to prove its worth to shareholders."
In the second half of 2002, Abbey National beat off stiff competition from other lenders to finance transfers in Cheshire and London.
Abbey National's withdrawal from social housing finance would lead to the sector's choice of lender being severely restricted.
This could force housing associations to look more seriously at the option of the capital market rather than traditional debt and loan financing.
The result of Abbey National's review will be announced alongside the bank's full-year results on 26 February.
Source
Housing Today
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