Abbey National has sold off consumer lending division First National, as the struggling High Street bank continues efforts to return to profit.

First National, which employs 1,400 people, has been sold to an arm of US-industrial giant General Electric, the bank said.

The �848m sale, to GE Consumer Finance, furthers Abbey National's plans to retreat into its core markets in UK personal financial services.

"First National's brand and strengths lie in different market segments, and it operates... largely independently of Abbey National's other businesses," the bank said.

Bidding war

The announcement received a cautious welcome in the City, which had been expecting First National to achieve a price nearer to its asset value of �630m.

"I'd been expecting them to get book value or even a touch less so this looks like the best possible deal for Abbey," one analyst at a US bank told Reuters news agency.

Banks including Lloyds TSB and Barclays are believed to have competed to win the First National purchase.

And a First National motor finance arm, not included in the sale, could fetch at least a further �100m.

UK expansion

But Peter Toeman, an analyst at Morgan Stanley, warned that the sale, while strengthening Abbey National's financial base, would hit its profitability.

"First National is quite a high return business for Abbey and selling will not compensate for the loss of profits," Mr Toeman said.

GE Consumer Finance (GECF), which boasts nearly $70bn of assets, is expected to further raise returns at First National measures such as the introduction of common processing technology.

And GECF, operational in 35 countries, said it would use First National to spearhead UK expansion.

"Our intention is to build on the further opportunities for growth that this acquisition provides," said Stuart Sinclair, GECF's UK managing director.

First loss

The sale comes three weeks ahead of the release Abbey National's full year results, which the bank has warned will show a loss, for the first time since it floated on the London Stock Exchange.

The bank is also then expected to update investors on other potential disposals, with train leasing division Porterbrook among divisions believed to be up for sale.

And it will announce a write off to reflect the loss in value of some acquisitions, amid the stock market sump.

Abbey National's declining performance prompted, in July, the resignation of chief executive Ian Harley.

The bank has been eyed as a takeover target by Bank of Ireland and National Australia Bank.

Abbey National shares stood 10p higher at 428p in morning trade on Tuesday.