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Brand design

Andrea Tryphonides looks at the strategy behind RBS’s radical brand rethink

Royal Bank of Scotland Group is undertaking a radical change of focus of its four brands to create better clarification through a single point of entry for intermediaries.

As revealed in Money Marketing in April, RBS has been canvassing brokers to better define the roles of The One Account, First Active, RBS and NatWest.

Savills Private Finance director Simon Jones says: “We have been asking RBS to define the four brands for the past two years. It has taken them this long to come up with a strategy.”

RBS Intermediary Partners has been created to deal with some of the concerns that have been voiced. HBoS is dominating league tables so it is not surprising that RBS Group wants a piece of the action.

Each of the four brands will focus on a specific market segment and intermediaries will have a single point of contact for sales and services from February 14. The One Account will continue to focus on current account and flexible mortgages, RBS will concentrate on mortgages for house purchase, NatWest becomes the brand for specialist lending and First Active becomes the remortgaging brand.

The group has grown significantly since its 20bn acquisition of NatWest five years ago. It acquired First Active in 2003 offering euro6.2 a share, valuing the business at the time at euro887m.

First Active had one of the most extravagant marketing campaigns at its launch in 2004, covering Trafalgar Square in artificial snow and a billboard and TV push.

Some brokers questioned the strategy of spending millions on advertising and marketing campaigns before displaying the real proof of the pudding.

John Charcol managing director Peter Barrett says: “This has been very interes-ting but the changes will not work overnight. First Active spent a lot of money on advertising and has been the most active of the four brands. It will be interesting to see what the result will be.”

RBS is the sixth-biggest mortgage lender in the UK, according to the Council of Mortgage Lenders, with 6.6 per cent of gross mortgage lending in the year to April 2005.

RBS is on track for another profit windfall, with City analysts predicting a figure of more than 8bn.

But chief executive Sir Fred Goodwin signalled the end of any acquisitions. He said RBS had “fulfilled all acquisition priorities”.

RBS says its total charge for provisions is expected to be in line with market expectations. It also said that there are signs that an increase in unsecured personal lending arrears may be levelling off but it is too early to conclude that arrears have peaked.

But the company expects its net interest margin for 2005 to be slightly lower than in the first half, mainly due to proportionally higher growth in big corporate and mortgage lending so a reasonably comfortable start in 2006 is paving the way for a focus on core lending and the transition of the four major brands.

John Charcol senior technical manager Ray Boulger says he expects NatWest to enter into other specialist areas, including sub-prime, while it would be favourable for The One Account brand to consider an offset mortgage. He says the brand changes will mean confusion for customers rather than intermediaries. He says: “If you are a Natwest customer and you want a mortgage, will the bank then send you to RBS? For some, this is going to be a bit strange.”

Hamptons managing director Kevin Duffy says he was initially bemused by the decision to make NatWest the specialist lending brand but he says many accountholders at NatWest will be small businesses which will require specialist lending facilities.

RBS commercial director David Jones says: “RBS Intermediary Partners will offer intermediaries a simpler and more straight-forward way of doing business with us. There will be one point of contact, one single relationship for the broker. As a result, we hope this will free up time for the broker. We realised that the brands were not perhaps as clear as they should be and our conversations with brokers have made us rethink how we can help brokers with transactions and make us as easy to deal with as possible.

“I am sure RBS has looked at HBoS and seen its success. The only problem I envisage is if you have one BDM trying to sell all four brands, you may lose out as a result. You cannot come along with a bag of goodies and four hats on and tell brokers to take their pick. Their approach is almost oversimplistic.”

Mortgage Intelligence managing director Sally Laker says she believes clarification of the brands is necessary, particularly for NatWest and RBS. She says: “This is a welcome move from RBS. Natwest and RBS do a bit of everything but are specialists in anything at the moment.”

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