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Rational linking

Last week, Santander revealed it would be scrapping its retail brands Abbey, Alliance & Leicester and Bradford & Bingley and bringing them all under the single brand.

The decision has not come as much of a surprise to many people in the industry. Santander has made no secret of its desire to push its global brand over the last few months.

It says moving to a single IT platform, Partenon, was one of the main drivers behind the move.

A spokesman says: “We have completed the Partenon system integrations in the Abbey, we will have the systems installed in B&B stores very soon and we will then begin with the A&L stores, which should be completed in 2010. It will cost around £12m for the rebranding but we will be saving £180m every year through the integration of the brands, so it makes business sense.

“Customers and staff were clear that they expected a change in branding in time. The strength of the Santander name has proved its worth during the credit crunch and we know from talking to customers that they value the strength and financial security that being part of a world-class global bank offers.”

However, Santander has decided to retain its brands on the intermediary side, so advisers will continue to deal with both Abbey for Intermediaries and A&L for Intermediaries after the branches become Santander.

Abbey and A&L managing director of intermediary distribution Ricky Okey says: “There are no plans to change the branding of the intermediary side of our business. We remain committed to the intermediary market and Abbey for Intermediaries and A&L for Intermediaries will continue to operate as two separate businesses for the foreseeable future.”

Alexander Hall chief operating officer Andy Pratt says this was a surprise to advisers: “Some advisers were worried Santander would look at HSBC and follow its business model all the way to scrapping its adviser arm completely, so it is welcome news that it is staying in the sector.

“Advisers are not that concerned about which brand the mortgage comes from. As long as Santander continues to offer a competitive range of products, advisers will be happy.”

John Charcol senior technical manager Ray Boulger says clients are not concerned about the brand behind their mortgage. “If we get a client a mortgage from a lender they have never heard of, very few people care,” he says.

But Boulger worries that retaining the intermediary brands will give Santander carte blanche to ramp up dual-pricing. He says: “Abbey is already guilty of dual-pricing but this decision may make it easier. The worry is that this rebranding will see intermediaries disadvantaged.”

Tangible Finance chairman Lucian Camp says the UK will see a lot more brand consolidation in the banking sector. He says: “In a crowded market, you need all the advantages you can get so, logically, financial institutions are going to become more brand-conscious in the future.

“Financial institutions have struggled to make their brands mean something, maybe with the exception of Nationwide. The problem is the financial sector has not seemed to care as much about brand power, management have focused their atten-tion elsewhere. The sector has been slow to realise that you build value in sound brand strategies.

“Sooner or later, these institutions will realise branding is key to success and we are moving into a world of huge global brands.”

There is speculation that Lloyds Banking Group will merge some of its brands and Boulger believes this could start to happen as early as next month.

Pratt says: “It will be interesting to see how the Lloyds’ branding situation plays out as I am sure that its plans will have to work round talks with the regulator, the Government and the Bank of England. What it would like to do may be affected by what it is told to do.”

Is the future of UK banks going to be global brand mergers aimed at domin-ating the market?

Finance and Technology Research Centre director Ian McKenna says: “It is inevitable you are going to see huge rationalisations. Brands that are going, like A&L and B&B, have had their share of bad press so it is not a great loss”It does not make sense to maintain historic brands as the mortgage market is a radically different place and will change even more in the future.

“You will probably end up with a situation where you only have as many mortgage lenders as you have life companies, whereas only a few years ago you could count them almost in the hundreds.”

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