The venture is described as a comprehensive wealth management service which will have a presence on the internet but will also offer a face-to-face service via branches in London, Manchester, Birmingham, Leeds, Watford and Bromley. It will offer cash management accounts, access to specialist tax and estate planning and execution only share dealing. Charges are around £600 per year for a £50,000 investment. In a statement Abbey National Chief Executive, Ian Harley, said: 'Inscape responds to the fact that we have a much more democratic distribution of wealth in the UK now.'

Abbey National's new business had been codenamed "Project Prosper" in a bid to keep the real name a closely-guarded secret. Analysts have welecomed the new venture, but note that a long queue of other banks branching out into this lucrative sector meant the products would have to be priced very competitively.

Credit Suisse, Switzerland's second biggest bank, last week launched a new online investment and banking service targeting the 7 million people it has dubbed Britain's "new affluents" - those who have £30,000 or more to invest. Earlier this year HSBC and stockbroker Merrill Lynch joined forces on a similar online banking and investment services company aimed at those with between £60,000 and £300,000 to invest. Halifax, too, offers a wealth management service and Alliance and Leicester plans to launch a product early next year.

Because wealth management is fee-driven, many UK banks see it as a way of evening out margin erosion in core retail banking areas like mortgages, savings and credit cards. Simon Price, a banking analyst at JP Morgan, commented: 'It's sensible for the banks to try and attack this market, and Abbey National have been very successful in their bancassurance business for the mass market. The difficulty is trying to pick which one of them will be the winner and there are no obvious reasons why it should be Abbey National.'

Abbey National has said that it has invested nearly 55 million pounds in Inscape since 1999, and the product is targeted to break even by the end of 2002. By the end of 2004, it is expected to have over 100,000 clients and more than £8bn of funds under management.

According to the company, Abbey National is also looking to launch an offshore version of the business during 2001.