Toby Hoare, the Bates UK chairman, confirmed that redundancies would be inevitable. "I don't yet have an idea of numbers but some tough decisions will have to be made," he said.
Woolworths is expected to switch its £17 million account to Bartle Bogle Hegarty, subject to successful fee negotiations and assurances that BBH can successfully handle such a demanding retail account.
This week the Cordiant-owned Bates was dealt a further blow when the agency was denied an invitation to repitch for its £21 million Royal Mail account.
Paul Troy, the head of marketing at Royal Mail, explained: "We are looking at where we want to go and we believe that other agencies are stronger in offering the integrated approach. Bates has done great television work for Royal Mail in the past but we want a big idea, an integrated approach that is through the line."
But Chris Herd, the Bates UK managing director, commented: "It's a great shame that, having done such a good job on Royal Mail, we weren't given a chance to enter the competition."
Meanwhile, the agency must also come to terms with the loss of its £6 million Wella haircare business in the UK within the next few months after the company's acquisition by Procter & Gamble.
Bob Willott, the editor of Marketing Services Financial Intelligence, commented: "As Cordiant tries to sell off its peripheral operations at sensible prices, a heavy loss of business in London is the last thing it needs. It's not only bad for morale but also raises questions about the creative product."
Privately, many Bates senior managers are angry at the negative effect Cordiant's problems are having on the network. "There's a loss of confidence in us because of Cordiant," one said. "We have to rethink things and do it quickly."
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