Royal Bank of Scotland's mortgage strategy following its successful bid for NatWest has come under fire from banking analysts.
They predict Royal Bank of Scotland will be forced to co-price and co-brand RBS and NatWest mortgages.
In the wake of its successful £21bn takeover bid RBS has restated its intentions to maintain the two brands separately justifying the move because it will maintain consumer choice.
But analysts have poked holes in this strategy because it will see NatWest continuing to serve what they describe as the “ailing end” of the mortgage market.
They argue many consumers will realise NatWest and RBS mortgages will be running off the same rationalised back office system – as outlined in the takeover proposals – so they will demand the same rates.
Commerzbank Global Equities European banking analyst Alex Potter is attacking the move, claiming the future of mortgages lies in direct products such as Virgin One.
He claims RBS will probably try to capitalise on NatWest brand awareness in provincial England but could be making a mistake by pushing “the ailing end of the mortgage market”
He adds: “If they try and premium price a NatWest mortgage above a RBS mortgage, for example, the wiser investor will be asking themselves 'why?' as they will be run off the same rationalised back office system outlined in RBS's proposal.”
He predicts RBS will ultimately be forced to “go down the Lloyds TSB route” of co-branding and co-pricing, claiming “The current strategy is very finite.”
But Cazalet Financial Consulting principal Ned Cazalet disagrees. He says: “There is no particular need to re-brand NatWest mortgages. Most people don't really notice what brand is what in the marketplace. For example, no-one really knows that Cheltenham & Gloucester is just a label.”
RBS spokeswoman Jayne Goodwins says: “We have made it clear since we launched the bid, we will keep the retail brand separate from Royal Bank and mortgages will still be offered under the NatWest brand. What we're about is offering our customers an element of choice.”