12 June 2000

Abbey National today joins the internet banking fray with the launch of Cahoot, its online bank.

In an increasingly cut-throat marketer, Abbey is offering its first 25,000 customers interest free credit card and overdraft facilities for twelve months. Over the longer term, however, the card and overdraft interest rates will vary between 7% and 11%. Other products, share dealing, savings and personal loans among them, are slated for the future.

Said Cahoot marketing director Tim Sawyer: "We don't make much money on the zero percent [interest rates], but it is really about establishing yourself. We're expecting a good response, not a deluge.”

Cahoot opens its doors with just 56 staff and aims to win customers by being the lowest-cost player in the market. Sawyer says Cahoot will target the individual needs of customers with “individualised pricing offering rates based on credit history.” The bank forecasts growth to 100,000 customers and 150,000 accounts by the end of this year.

News source: BBC Online Business News (UK)