Tugendhat: ten years with Abbey

Lord Burns retired from the Treasury in 1998, where he was permanent-secretary to Chancellor Gordon Brown.

During his 11 years at the Treasury, he gained a reputation for dealing with complex and politically-sensitive problems, experience he later put to use as head of the government's inquiry into fox hunting.

He then went on to replace Dame Helena Shovelton as chairman of the Lottery Commission in October 2000, for a year.

Abbey National shares were up 2.5% at 1040 in early trading, on news of Lord Burns' appointment.

'Wide-ranging experience'

Lord Burns will remain as chairman of Glas Cymru, whose take-over of debt-hobbled Welsh Water has been touted as a model for the government's planned transfer of collapsed rail operator Railtrack's assets into a not-for-profit company.

The grammar-school educated peer is also non executive director of media giant Pearson and British Land and a former non-executive director of Legal and General.

Abbey National praised Lord Burns' "wide-ranging experience in financial services and economics."

In a statement, Lord Burns said: "Abbey National has a superb franchise and a great track record.

"I am looking forward immensely to my new role."

'Great company'

Lord Tugendhat is to become non-executive European chairman at Lehman Brothers, which advised Abbey during its failed attempt to buy Bank of Scotland.

It also defended Abbey from a hostile take-over bid by Lloyds TSB, which was eventually blocked by regulators.

In a statement, Lord Tugendhat said: "Abbey National is a great company. I have enjoyed my time with it enormously.

"I am also proud to have contributed to its rapid profit growth and evolution from a pure mortgage and savings operation into a widely-diversified major financial institution."

Sensitive time

Lord Tugendhat is a former financial journalist and Conservative MP for the City of London and Westminster South.

He is also a former European Commissioner and chairman of the Civil Aviation Authority and a former chairman of Blue Circle.

He told the Financial Times newspaper he would stay as chairman at Abbey until the first quarter of next year.

The move comes at a sensitive time for Abbey, which is restructuring its wholesale division following losses on its US junk bond portfolio.

Ian Harley, chief executive of Abbey National, said he was "absolutely delighted" to welcome Lord Burns to Abbey National.

"His broad range of skills, particularly in the financial arena, will be invaluable in taking the business forward."