Losing goodwill by changing names
Now that the Abbey, Bradford & Bingley and Alliance & Leicester names are going, should the really troubled banks be rebranded too? What goodwill is there in now names like Northern Rock or Royal Bank of Scotland? Or Halifax of Bank of Scotland?
It certainly makes no sense for Santander to trade under the Abbey, B&B and A&L names and if it is changing, you can see why is decided to ditch them all and impose the Spanish parent’s name.
But while in the City, Santander may be known and trusted, at the consumer level, those old names are even better respected. Many millions have been spent on advertising create an image for those brands that are being killed.
When RBS took over National Westminster nearly a decade ago it was ruthless in cutting costs, but it did not abandon the NatWest name or adopt that brand for the relatively small RBS customer base. RBS wisely realised that when it bought the bank it paid for the goodwill and it was best exploited.
Aviva’s decision to put the plc’s name on Norwich Union is demonstrating the massive cost in persuading the public to accept a name it does not know instead of one it does. It may be neat to operate under one name globally but it is expensive, both in terms of expenditure and lost custom.
Outside the financial arena, ask what advantage there was in turning Marathon bars into Snickers of Opal Fruits into Starbursts. Even now, a large part of the consuming public is confused.
HSBC imposed its name on the venerable Midland Bank when it bought it, but the UK bank had already lost its prime status by bad decisions and management. And its Far Eastern rescuer condensed the Hongkong and Shanghai part of its name into initials so as not to scare UK customers.
Johnson Matthey had to be rescued by the bank of England however but the metals side of the firm still operates under that name as a FTSE 100 company without apparent damage to its reputation. There is still value in the Barings name despite the bank’s collapse.
So the troubled banks, including Lloyds, will continue to trade under their well-known names even if the brands are tarnished. Perhaps Northern Rock will be sold to a safe home that rationalizes its name in the same way Santander is doing to its portfolio of brands, but it takes an awful lot of bad publicity to undo the goodwill that is built up over decades and it is very difficult creating a new brand from a standing start.
Abbey’s demise can only help its arch-rival Halifax.
