Cheltenham & Gloucester can exist without branches
If 164 Lloyds TSB bank branches were being closed it would hardly be headline news. Axing the whole Cheltenham & Gloucester chain has attracted undue attention, but there would be no point in the HBoS merger if there is not rationalisation. (See LON:LLOY).
Lloyds bought TSB and C&G in the 1990s. It now owns the Halifax and Bank of Scotland branch networks too, plus brands such as Scottish Widows, Clerical Medical and IF. It has 3,000 branches. It would be folly to compete with itself on so many brands and locations.
If there is an unfairness it is that C&G is an untarnished bank and not part of the tainted HBoS inheritance. The loss of the name from the high street is a blow to pride in Gloucester and Cheltenham but with housing activity down by two-thirds, there would have been cuts at the mortgage bank even if Lloyds had not disastrously bought HBoS.
Luckily, the unwieldy HBoS name has attracted the flak from critics of its banking practices rather than the consumer brands of Halifax and Bank of Scotland.
And wisely, Lloyds is not throwing away the goodwill of the C&G name – unlike Santander, which is ditching the Abbey, Bradford & Bingley and Alliance & Leicester brands. In rationalizing three brands, the Spanish parent is losing the benefit of Abbey’s strong name but Lloyds will continue to put C&G’s brand on existing mortgage and savings products and offer them through financial advisers.
Lloyds is thus following Barclays, which closed the Woolwich branch network after buying the company but still exploits the brand name by offering Woolwich mortgages. These banks thus have the best of both worlds: it has not quite created virtual banks but they have turned Woolwich and C&G into branchless banks.
However, Royal Bank of Scotland rightly did not try to rebrand NatWest after buying it nine years ago: each is strong in separate geographical areas, just as the group’s Coutts brand is strong in its socio-demographic position.
Lloyds will similarly keep Bank of Scotland as a stand-alone brand with a branch network because there is little geographical overlap and BoS has a strong reputation in its home country.
The next step for Lloyds is to integrate its branches with Halifax’s. Many high streets contain both banks doing much the same business: it makes sense to eliminate duplication.
But for all the fuss over C&G’s name disappearing from the high street (and Lloyds would be wise to place it prominently in branches close to C&G closures) there will be even more branches axed from the rest of the estate. About 400 branches need to go in total, even if it is the 164 C&G closures that generate the sentimental headlines.
