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New banks, or more of the same?

Douglas Fraser | 09:30 UK time, Wednesday, 4 August 2010

Great news, bank customers! There's more competition on the high street, as the Royal Bank sells off 311 of its RBS-branded branches in England, and seven branded NatWest outlets in Scotland.

Well, there should be. But is there?

This is a large part of what the European Commission demanded as the price of approving the UK government's bailout. It saw Britain's banking system as in need of more competition.

The former Chancellor, Alistair Darling, was in agreement - that this was an opportunity to increase the amount of competition for customers.

The new Chancellor, George Osborne, agreed too.

Then why is it that the sale of this large tranche of the British banking market has been to Santander, one of the existing big players?

Spanish giant

Every high street, and lots more besides, will recently have seen the Abbey, Alliance and Leicester and part of Bradford and Bingley take on the Spanish giant's branding over recent months.

So this acquisition of 318 RBS-branches only makes the fifth biggest player quite a bit bigger, and doesn't seem likely to expand the range of options and products available to the consumer.

Note this has been a strong part of RBS. It's not one of those non-core Asian assets - mostly legacy of the former Dutch empire of ABN Amro - that it's flogging off with some enthusiasm.

With the branches, Santander is gaining 1.8 million retail customers, or 2% of that market.

It gets 244,000 small and medium-scale businesses and 1,200 mid-corporate clients, both representing 5% of those markets within Britain.

The tranche of RBS had £21.5bn in total assets and £22bn in customer deposits at the end of last year.

The European Commission required divestment within four years, starting last autumn. So this was an opportunity for the regulators - and RBS's biggest shareholder, the UK government - to use their clout do something significant for banking competition, just as they said they wanted.

But the way the sale turned out, others stepped away and RBS was left negotiating with only one bidder.

Aussies walk away

The attraction of encouraging National Australia Bank to build up its presence would have made good sense.

With Clydesdale and Yorkshire already under NAB ownership, the RBS branches would have given it a network with particular strengths in north-west England, while Northern Rock's sale could give it clout in nort-east England.

The Melbourne bosses were interested, but stepped away when they decided opportunities look better outside Europe.

That tells its own story about the continent's economic position in the world.

With more divestments on the way, immediate attention shifts to RBS sale of its transactions business. An announcement is expected soon.

Then it's on to its insurance business, including Direct Line and Churchill - also forced on to the market by the European Commission.

There's no evident rush there.

The downturn has hit profits. Claims, it seems, go up when people get short of cash. And there are further efficiencies to be driven in these businesses before they can maximise their sale price.

Lloyds watches

Then it's on to Lloyds Banking Group, which has been told by the European Commission to sell off Lloyds TSB Scotland and Cheltenham and Gloucester.

No sign of movement on either of them so far, and it has more than three years in which to do so.

It has been watching the RBS sale with interest, presumably thinking there will be a better price for Lloyds' assets further down the road.

If this morning's announcement of a boost to Lloyds' profit is any guide, the price of bank assets may indeed begin to rise.

You've got to wonder if the RBS sale of those 318 branches has been done too hastily.

    NatWest in Scotland
    The sale of seven NatWest branches in Scotland raises the question of whether they might be replaced.
    They've had two roles. One has been to provide services to NatWest customers in England and Scotland who find themselves temporarily in Scotland.
    And they are in university locations to appeal to English students in Scotland, who can be expected to return south of the border - taking their income, wealth and borrowing potential with them.
    That business case remains as compelling now as before, so why not open up new branches?


  • Comment number 1.

    I agree with Douglas Fraser. How does this improve competition? My local High Street will have 5 branches of Santander with all the take overs it has made.

    It is also reducing the choice to savers as they no doubt will operate under one banking licence which effectively means £50,000 limit per saver if one wants protection under the FSA banking protection.

    There is nothing to stop RBS customers voting with their feet and transferring their accounts to a Scottish branch.

  • Comment number 2.

    I really can't work out just why Santander are buying these additions to their already substantial branch network - unless they are planning to do something different with some of their many branches. I mean they could open a new network of say 7 day a week money shops under one of their many brands (or even a new one), or turn them into unmanned banking foyers with ATMs and similar machines.

    What is bad though is that a huge wad of RBS/NatWest customers (both pesonal and business) who have stayed with the bank through the recent problems - for whatever reasons - are now suddenly sold off to a third party.

    Does it never dawn on anyone in the financial industries that some customers are fussy about who they give their money (and their financial affairs) to, and just because those customers currently of trust their current providers, that does not mean they will automatically trust or feel o.k. with some other company or Boardroom?

  • Comment number 3.

    I don't understand - if my account my was with RBS before they sold off these branches, surely that remains unchanged, despite the fact I no longer have an RBS available on my high street? The notion that physical branches have anything to do with my account is out-dated.

  • Comment number 4.

    It makes no sense at all. it's just as "knee-jerk" as Lloyds being boxed into a corner to buy HBOS. thousands of loyal staff and even more loyal customers feel wronged. As Douglas says,what happens to RBS customers when they finds themselves in England and Natwest ones in Scotland now? I appreciate that santander had a small representation on the business front but move has done NOTHING for the consumer on the high st - that is nothing positive

  • Comment number 5.

    I was a Williams & Glynns customer, so have been with RBS group for a good few years now. It defies belief that beaurocrats can force the bank to not only sell the physical branches/building/fittings etc, but also sell the customers and accounts to another bank, all in the name of competition and then allow the sale to a competitor who is swallowing up large chunks of the UK banking industry. My account in is Altrincham though I live in the Netherlands currently, but have no desire whatsoever to be a customer of Santander.
    I spoke to my RBS manager today and my account will be transferred to an Edinburgh branch later this month. I suggest that other RBS customers who do not want to be bought and sold like pawns in a giant monopoly game do the same. The sale is being enforced on RBS in the name of competition, my advice is to make use of this competition and move accounts to a RBS branch in Scotland. With internet and telephone banking it's easy to keep a check on things and I'm sure that the Welsh and English branches will be happy to help transfer accounts to another branch, as I cannot see Santander keeping all 311 RBS branches open. What would be the point of having 4 or 6 branches of the same Spanish bank within a few hundred yards of each other on the same HIgh Street?
    Move your accounts while you can.

  • Comment number 6.

    I do not believe the Royal Bank of Scotland has the right to "sell" my account and personal details to another organisation without my permission. I will certainly be taking up Bluf483's suggestion. I do not want my account with an overseas organisation which already has too large-a share of the British high street

  • Comment number 7.

    I originally had my account with Williams & Glynns- moved from Midland about 25 years ago. I was quite happy when it was taken over by RBS who at the time were a well resprected and efficient bank. They developed a very goo on-line banking system, probably one of the best. The taker- over of NatWest was a bit of a shock and, as is well-known, it all went down hill from that point. I have stuck with RBS since the crisis out of some , perhaps misguided, loyalty to see what would happen. I was dismayed to learn the their English Branches have to be sold by EU directive, but was hopeful that it may have been to another good presopective bank. Now they are to be sold to Santander...I also have an Alliance & Leicester Account ( from GIROBANK days) and can honestly say from experience that since the "rescue" by Santander the service is rubbish. The arrogance of their assumption that customers will remain with them is unbelievable, I sincerely hope that most people will do I am and move their accounts. At least the UK based banks pay dividends into our pension schemes, which goes someway to compensating for the money we taxpayers have "lent" them.

  • Comment number 8.

    6. John Manning wrote:

    I do not believe the Royal Bank of Scotland has the right to "sell" my account and personal details to another organisation without my permission.

    Sorry John, but I think you'll find they can do this only too easily. It's pretty similar to when you take out an insurance policy with a company you feel o.k. about and think you can trust, e.g. Abbey National and then find a few months later they've sold their insurance division off to some third party that you've never even heard of, let alone want to do business with.

    And that sort of thing happens all the time. I mean how many people who were customers of Abbey or Alliance & Leceister or Bradford & Bingley really wanted to end up having their money with Santander?

    The fact is just about any financial business, bank, or insurer, can be bought and sold taking your deposits, insurances, current or credit card accounts, debts, investments, mortgages or whatever with it.

  • Comment number 9.

    It took me a few phone calls, but once I found the right number I was assured that I can switch my account to a Scottich branch and that I can insist my details are not handed to Santander. My complaing now is that RBS has not been open and up front with customers who might be affected by the changeThey tell me information will now be sent out this weekend..

  • Comment number 10.

    Hi there.

    When I heard that RBS was being forced by the EUSSR to sell the old William & Glyns branch network, I felt a little concerned. When I discovered that Santander was the likely purchaser I was extremely unhappy. Friends of mine who where with Abbey, Bradford & Bingley and Allience & Leicseter told me of how they felt that the new owners where not the ones they were happy with.

    I was determined not to be part of a Non British Bank, I asked how likely it was for the sale to go ahead. I received non commital answers from both my local branch and RBS Head Office. I made enquires at other Banks to how easy it was to transfer my accounts to them. When the sale was announced the other day I made an appointment to do just that with another British Bank.

    When this sale goes through, Santander will have four Branches in my home town, three of them will be facing each other on three out of four courners of a road junction, the fourth one is just around the courner. That means that Santander will have four Branches within 200 yards of each other.

    No prizes for guessing how many will still exsist in about 3 years time, I guess we will have only the one branch. This is a wonderful exercise in choice for the customer. I really object when my bank changes anything concerning my accounts without asking me first. As for 'selling' my account to another Bank, that is beyond the pale as far as I am concerned, so despite being told it will be 12/18 monthes before the change will happen. For me it will be 3/4 days as I have an appointment to set up new accounts for myself & my wife, 3 of my five children who have RBS accounts will be moving to another Bank in the next month.

    This is the only way to make our displeasure known to those who feel they can treat us in this highhanded way. If as many of us as possible leave the English & Welsh Branches of RBS to other Banks, the benefit to Santander will be greatly deminished and it is possible that the sale will fail. If not then at least they will have lost many accounts of people who don't wish to have the 'pleasure' of being a Santander customer.

  • Comment number 11.

    With this development, my banking arrangements are scheduled to have gone from two current accounts and three savings accounts with a total of four different institutions (with corresponding FSCS protection) to having all of my finances handed over to Santander.

    I feel VERY uncomfortable at this clearly anti-competitive development, adn will be lobbying my MEPs to ask that pressure be brought to bear at a European level to stall this development.

    Indeed, instead of five Santander accounts, I am minded to reduce the number to nil!

  • Comment number 12.

    I have received notification today that my RBS account is to be transferred to Santander. What about customer choice after 29yrs with RBS? If I really wished to become a customer of Santander I could walk into my local branch (there are now two following their snatching of Alliance & Leicester and Abbey), and arrange this for myself.

    I will not be traded as a commodity to another business whatever Darling or Osborne think! As a longstanding customer (and shareholder) I still believe that it is for me to decide who holds my money. We will do it my way guys - or I walk! Anyone else up for the fight?

  • Comment number 13.

    Everyone, RBS had NO choice in this matter. They were forced by the EU to sell these branches and transfer the customer accounts and we're NOT allowed to communicate to customers and perahps advise them to just ask their branch to tranfer their account to an existing RBS / NatWest branch that is not being sold to Santander. So before you all go blaming RBS, remember their hands were tied and this has been forced upon them also. Would also be good to consider how the staff of these sold off branches feel as many of them will no doubt lose their jobs once Santander start to merge their network.
    Oh, and the letter we all recived did not come from RBS, but from Santander.
    Simply call your branch or telephone banking and just ask for your account to be transferred.

  • Comment number 14.

    Hi All.

    I have already transfered my accounts from RBS to NatWest. It took me about 1 hour to do it all. So I Have escaped from the clutches of Santander for the time being.

    Yes Travelady, I know the sale was forced on RBS/NatWest by the EUSSR, but they only needed bailing out due to the complete shambles that was left after the former Senior Bank Officers had completely ruined it in their pursut of ever greater bonuses.

    It is only a small start, but already through myself, my wife and children transfering away from RBS(in England & Wales), Santander have lost 5 customers and about 12 accounts of various types. If as Aspey61 says, I am up for the fight, I still have one my RBS accounts, it is lying dormant with a few pence in it to keep it open, so if the sale doesn't go through then I could transfer back to them with minimum problems. I have made my stand, I have refused to be sold to another Bank without MY AGREEMENT, so its up to the rest of the RBS(England & Wales) and NatWest(Scotland) account holders to make their voice heard.

    By the way on my local newspaper discussion group, according to what is said there already another dozen or so people have either moved to another Bank already, or have transfered their accounts to a Scotish Branch and are dealing with them through online banking.

  • Comment number 15.

    "The former Chancellor, Alistair Darling, was in agreement - that this was an opportunity to increase the amount of competition for customers. "

    The government appears to suggest that all it can do is sit and hope. The Government could easily stop this - IF it really was interested in competition.

    First the gov could call for a competition inquiry or
    it could use its majority shareholding to intervene.

    £1.65bn is a firesale price, If I were Cable/Osbourne I'd say that we can't get a fair price for the assets on the open market, so we perform a stock-split.

    List Williams&Glynns as a business separate to RBS Group. Each shareholder gets one share in the new bank for every share in RBS group that he/she/it owns
    This would create GENUINE competition, and benefit shareholders by allowing them to decide what their assets are worth (by deciding if/when/at what price to sell the new shares).



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