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How will the Santander re-brand impact you?
By Rebecca Atkinson
Santander (BNC) has announced that it is re-branding its three UK banking businesses, Abbey (ABBY), Alliance & Leicester and Bradford & Bingley (BB-), with the high street bidding adios to their individual logos by 2010.
Around 1,000 Abbey and Bradford & Bingley branches will be re-branded during the first three months of 2010, with Alliance & Leicester following during the latter half of the year.
The re-brand kicks-offs with Abbey credit cards, which will be re-branded Santander in July 2009. All new cards will be issued under the Santander name, as will replacement cards as they come up for renewal. Later this year, Abbey and Alliance & Leicester's corporate and commercial banks will also be renamed Santander.
Background
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, which is the second biggest banking group in the UK after HSBC (HSBA), 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.
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.
Why the re-brand?
Since the acquisition of Abbey, Horta-Osório says its has 'transformed' the business to reflect Santander's business model and values, as well as its efficiency. This, he adds, offers customers better value-for-money products and improved customer service.
Santander has put a lot of time, effort and money into promoting its brand, both here and abroad. For example, its sponsorship of Formula 1 team, McLaren, of current world champion driver Lewis Hamilton.
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 likely 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?
"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 explains. "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. It expects to complete this exercise by the end of 2010.
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.
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.
However, there are concerns that the creation of a new banking superbrand could cause some casualties. Kevin Mountford, head of banking at moneysupermarket.com, says: "Consumers will need to keep their eyes peeled to see how this will affect them."
"Individually Alliance & Leicester, Bradford & Bingley and Abbey all offered some well priced, good value products that challenged the big four clearing banks. However, when all the brands are combined under Santander we must expect there to be a reduction in choice and competition on the high street."
This could mean reversion rates, for existing savings or mortgage customers for example, could potentially become less competitive.
There has already been a reduction in choice for Santander's UK customers since the acquisition of Alliance & Leciester and Bradford & Bingley.
For example, Alliance & Leciester's current accounts are not available to people moving away from another Santander bank account. And Abbey's 4.01% savings account can only take funds from accounts outside of the Santander group.
"While there will be a reduction in choice and competition from the re-branding exercise, I hope Santander will continue to challenge the main high street banks by offering good value products and excellent customer service," Mountford adds.
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.
"While a comprehensive branch network will be convenient for Santander customers, it will be the competitiveness of the combined product offerings and levels of customer service that will play a major role in determining market share across the full range of banking products," says Andrew Hagger, spokesman for comparison website moneynet.co.uk.
There also remains a question mark over the way the three banks will be licensed by the Financial Services Authority (FSA) and, therefore, the Financial Services Compensation Scheme. Currently they all have separate licenses, which means customers are protected up to £50,000 per brand even if they have money in another of the banks.
The re-brand will be completed by mid-2010. But by these point, the FSA's review of the savings safety net in the UK should have been completed and the issue of banks' licenses might not pose such a great concern.
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