How will the Santander re-brand affect you?
The high street has bid 'adios' to the Abbey and Bradford & Bingley brands, with both banks re-branded Santander from today.
The Spanish bank will stamp its brand on all 1,000 Abbey and Bradford & Bingley branches by the end of January. Alliance & Leicester;s 278 branches will be renamed later this year, making Santander the fifth largest bank in the UK with 1,300 outlets.
"Although Santander has been in the UK market for some time now, only now are we starting to see their brand appearing on the high street,” says Kevin Mountford, head of banking at moneysupermarket.com.
“Abbey customers will now find themselves fully integrated into one of the strongest banking groups in the world, as will those with a Bradford & Bingley savings account.”
Abbey credit cards were re-branded Santander in July 2009.
The re-brand represents nearly 500 years of building society history. Abbey was established as a building society back in 1849, following the establishment of the National Freehold Land and Building Society.
This merged with the Abbey National Building Society, to form Abbey National, in 1944. It was the first building society to demutualise and be floated on the London Stock Exchange in 1989.
Alliance & Leicester's history began in 1852 with the formation of the Leicester Permanent Benefit Society. It converted to a public limited company in 1997. Bradford & Bingley, meanwhile, was formed in 1964 as a result of the merger of the Bradford Equitable Building Society and the Bingley Building Society, both of which were established in 1851. It converted into a public limited company in July 2000.
Santander was established in 1857, but it didn’t have a UK presence until the acquisition of Abbey in 2004. The £8 billion purchase also represented Europe's biggest cross-border bank takeover.
The onset of the banking crisis in 2008 gave it further opportunities to gain a foothold in the UK; in September it paid £612 million to take control of Bradford & Bingley’s savings business, and later bought Alliance & Leicester in a £1.3 billion deal.
Santander also owns cahoot, Cater Allen and James Hay in the UK. These businesses, as well as Abbey for Intermediaries, which only sells products such as mortgages through financial advisers and brokers, will retain their individual brands.
Why the re-brand?
Santander says the re-brand has always been on the cards, as it wants to operate under a single global brand.
When the re-brand was announced last year, António Horta-Osório, chief executive of Santander UK, said: “We know from speaking to our customers that they value and appreciate the strength and financial security that being part of a world-class global bank offers - particularly in the new global banking environment.”
Since the acquisition of Abbey, Horta-Osório said it had “transformed” the business to reflect Santander’s business model and values, as well as its efficiency. This, he added, offers customers better value-for-money products and improved customer service.
Ultimately, the change reflects the group's policy to operate under a single global brand – a move hinted at when it incorporated its flame logo into the Abbey brand.
While this comes at a price for Santander (the UK re-branding exercise is expected to cost £12 million, not including advertising and expenses), it is expected to eventually save the banking group £180 million.
What does it mean for me?
Santander says the move represents a great opportunity for its 25 million customers as it will allow them to use any Santander branch to manage their accounts. In total, 1,300 branches will be re-branded, and Santander says it will maintain its high street presence in the UK.
“Bringing together the three brands means it will be even easier for customers to manage their finances as they will have access to over 1,300 branches once the change is complete,” Horta-Osório explained. “With this in mind, the time is right to make the move to a single UK identity as Santander, a powerful new force in UK banking.”
The re-brand is more than just a logo change. Over the past three years, Santander has been moving its UK businesses onto its global IT platform, Partenon.
By maintaining just one IT system, Santander says its customers can transact “seamlessly” across its UK branch network, regardless of which bank they are with. It also allows Santander to offer its full range of products across all three banks.
Santander has attracted more than one million customers in the past year. It recently started offering a penalty-free current account to mortgage customers, re-launched its popular Zero credit card, and announced that customers can use Santander cash machines in Spain for free.
Alliance & Leicester’s £100 current account switching incentive has also been re-launched, and the fomer building society recently overtook HSBC as the most competitive mortgage lender.
Other than improved access to branch services, the re-brand should have no immediate impact on customers. Their relative products’ terms and conditions should remain as they are.
Mountford says: "Both Abbey and Alliance & Leicester are strong contenders in the current account market and have noticeably strengthened and maintained their offerings.”
The changing face of banks
Changes to the high street – and banking as we currently know it – are now fully underway.
Virgin Money recently took the first step to launch itself as a retail bank with the acquisition of Church House Trust, a small regional building society. The credit card provider has ambitions to become a major player on the high street, and will start building up the business by focusing on savings and mortgages.
Elsewhere, Northern Rock has been split into a ‘good’ and a ‘bad’ bank, with the former sold off, and bailed-out Lloyds Banking Group and Royal Bank of Scotland have been ordered to sell off chunks of their respective businesses.
Chancellor Alistair Darling last year called for more competition in the banking sector.
However, there are fears that the re-brand of Santander’s UK banks could reduce competition.
Mountford explains: "The disadvantage of bringing these brands under one roof is it reduces competition so customers should make sure they are on the best deals and be prepare to switch to better products if they are not.”
But Andrew Hagger, spokesman for Moneynet.co.uk, points out that Santander has improved its competitiveness since taking control of UK banks, in a serious bid to increase its market share.
“For many years both Abbey and Alliance and Leicester have been extremely competitive in the current account and personal loan sectors and there’s no reason that this rebrand should see that competitive edge diminish,” he adds.
“With the prospect of some new providers entering the fray, the Spanish giant can’t afford to become complacent or reduce the competitiveness of its product pricing.”
There is a risk in the re-brand; while Santander has improved its brand recognition in the UK in the past few years, it is still effectively looking to replace brands that have been in existence for decades.
Bank loyalty in the UK is fairly strong, with only one in 20 people changing their current account provider in 2007, according to the Office of Fair Trading. Whether people are loyal to a bank, or its brand, remains to be seen.
Permanent and absolute ownership and tenure of a property (residential or commercial) and/or land with freedom to dispose of it at will but with no time limit as to how long the property/land can be held (in perpetuity). Freehold is the opposite of leasehold.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.