'Strangling' costs Abbey up to £10m

STRANGLING has cost Abbey National between £5m and £10m. It paid this much to settle a long-standing row over the sale of 'strangles' by an American company for which Abbey's Cater Allen subsidiary did administrative work.

AP Black sold the strangles, or currency derivatives, to investors in Jersey, who hoped to receive potential gains of more than 25% a month at low risk. But some investors lost more than £1m each. The Jersey Financial Services Commission brought a claim against Abbey for up to £30m damages.

Abbey says it admitted no wrongdoing or liability but agreed a settlement to resolve the issue. Its new management wants to brand the group as consumer friendly and trustworthy.

The shares rose 3 1/2p to 579 1/2p. Like other banks they have had a fillip on bid hopes since JP Morgan Chase's £32bn offer for Bank One in the US. Annual results are due on 26 February.