Abbey National the British bank which spurned Bank of Ireland's recent takeover approach, warned today that it will post a loss this year after a £1.9 billion profit last year.
Abbey also said it expected to cut its dividend in its first trading update since shaking up its management team in July.
In recent months, the bank has grappled with rising bad debts, slumping profits and unwanted bid approaches from predators. It issued a profit warning in June.
Then chief executive Mr Ian Harley quit and the group's weakened financial position led to a takeover approach from Bank of Ireland, which Abbey rejected.
New chief executive Mr Luqman Arnold said today the group would focus on its core retail banking unit and was likely to sell some parts of its troubled corporate banking division.
However, Mr Arnold added that changes in how the bank accounts for its life insurance operation, which has been hit by stock market turmoil, would hit group profits.
Abbey shares were quoted down three per cent at 620p ahead of the opening of trade on the London stock exchange.
Abbey shares have lost nearly 40 per cent of their value since the start of 2002, and have underperformed European rivals by about 20 per cent over that period.