Santander Shouldn't Completely Kick the Abbey Habit
Of all the British banks for which a name change would hide their shame, Abbey is not one. Northern Rock, Royal Bank of Scotland, Halifax, Bank of Scotland and even Lloyds are tarnished brands since the state rescued them. Yet it is Abbey, the former UK building society with a relatively unimpaired balance sheet, that will disappear, replaced by the name of its Spanish parent, Santander.
This is a self-inflicted destruction of a brand, like Norwich Union's transformation into Aviva or HSBC stripping Midland Bank of its well-established identity. Other names, like Safeway or Forte, disappeared in takeovers, or crumbled into insolvency like Woolworth or Rover, but Santander has chosen to replace a well-known and trusted intellectual property with one the UK public will have to be educated to accept.
There are many reasons to change brand names, some of them good. There can be synergy in consolidating branding, as when Nestle bought Rowntree. Or a corporate name can confuse: B&Q invented the Kingfisher name to point out it was not only a DIY chain, for instance. And sometimes the old name is so badly regarded that anything else is better; Slater Walker survived the 1970s secondary banking crisis but started afresh as Britannia Arrow.
Yet it can be better to repair a damaged name than scrap it. Guinness remained Guinness despite years of being synonymous with a City scandal; Rolls-Royce retains its identity despite going bust.
When Santander is raising finance on international markets it makes sense to use a globally-known name, but when it is lending it on high streets it needs local goodwill. Any currency gained by letting UK citizens know they can use branches worldwide is thin: holidaymakers know about reciprocal banking arrangements. Changing names is surely a domestic rather than international move: having rescued Alliance & Leicester and Bradford & Bingley last year Santander does not need three British retail chains and if it is to amalgamate them into one brand it might as well change Abbey at the same time.
So much for the goodwill in the £10bn paid to buy those banks, including the £8bn takeover of Abbey in 2004.
Yet consumers do remember brands long after they are gone. Many customers still think of their bank as Abbey National even though the suffix was dropped five years ago. Indeed, the damage inflicted in that change makes it easier to ditch the diminished Abbey now.
But people have placed long-term savings with Abbey and taken 25-year mortgages: Santander would be wise not to abandon the brand entirely. Barclays bought Woolwich, an Abbey rival, and closed its branches but still uses the name on home loans, for example: Santander might well find value in offering Abbey products to people who value familiarity, even if the brand dies.