Abbey is fighting a rearguard action against a record £2.8m race discrimination award made to a former employee, in a case that highlights the huge risks facing businesses that are shedding staff in response to the credit crunch.

Balbinder Chagger, an accountant of Indian descent, claimed racial discrimination and unfair dismissal after he was forced to forgo his £100,000-a-year salary and retrain as a teacher when he was made redundant by the retail banking group in 2006.