Abbey National is set to sell its consumer credit division First National for about £800m ($1.2bn), according a report in the Sunday Telegraph.

The paper said the bank had appointed Morgan Stanley to handle the sale, and that High Street banks such as Barclays and Lloyds TSB were thought to have been contacted over the past few weeks.

A spokesman for Abbey National said the bank would not comment on specific companies, but added that when Abbey released its half-year results it said it may be looking to dispose of some its non-core assets.

The Telegraph said the sale of First National was the most important part of a back to basics plan by Abbey's chairman Lord Burns.

The bank wants to refocus on its mortgage lending and other retail banking services.

Tough times

The Abbey, the UK's sixth largest bank, is under pressure to improve its performance after disappointing investors with lower than expected profits earlier this year.

Abbey's worsening financial position, blamed on risky corporate loans, has pushed the bank's shares lower and led to the resignation of its former chief executive Ian Harley in July.

The bank is still looking for a replacement for Mr Harley.

Last week it was reported that Abbey was considering cutting 3,000 jobs - about one in 10 of its workforce - in an effort to cut costs.

And Abbey's share price ended the week at its lowest level for six years on fears that it may have to increase provisions for bad debts at its wholesale bank.

Major sale

The Telegraph said that bankers thought Abbey National could raise about £800m by selling the consumer credit business.

First National contains three main businesses including Tricity Finance which provides credit at point of sale through retailers.

It also has a motor finance division, and a third division gives loans to people with bad credit ratings.

Abbey tried to sell Tricity for about £250m last year, but pulled the sale after it could not agree a price.