National Australia Bank’s two UK
subsidiaries, Clydesdale Bank and Yorkshire Bank, are enjoying a
renaissance despite the woes of the wider UK market, according to
Steve Reid, NAB’s director of UK retail banking. He tells Douglas
Blakey about the changes NAB UK has gone through in the past five

In sharp contrast to beleaguered rivals such as
Royal Bank of Scotland and HBOS, National Australia Bank’s two UK
brands – Glasgow-based Clydesdale Bank and Leeds-based Yorkshire
Bank – are sitting pretty. At least, that’s what Steve Reid, NAB’s
director of UK retail banking, says. The two units combined have
reported full-year 2008 figures – and recorded a post-tax profit up
2.5 percent to £249 million. Could NAB UK be the only UK bank to
report a rise in annual profit for fiscal 2008? UK - retail banks, ranked by branch numbers

Well funded, with rising customer numbers, strengthening brands
and a refreshed branch network, NAB UK, he told RBI, is in
confident mood. And amid the carnage of record write-downs, a
succession of nightmarish PR disasters and an almost universally
negative press endured by the majority of its rivals, NAB UK has
not reached out to government for a bailout.

An advertising campaign complete with new tagline, its high
profile Scottish football sponsorship deal of 2007 and recent
investment in product innovation highlight the bank’s confident

“We are not in the business of talking down the other banks but
have emphasised in our marketing messages why we are in a strong
position,” said Reid. “While we are very much open for lending
business, the focus of advertising has been more balanced towards
deposit gathering.”

Less than five years ago, Clydesdale and Yorkshire, which were
bought by NAB back in 1987, were widely perceived to be a banking
basket case. At the time, Clydesdale and Yorkshire faced a number
of challenges: poor brands and brand marketing; weak management;
underinvested IT infrastructure; and shrinking customer numbers.
More than 10 years after NAB UK acquired Yorkshire, it remained on
a different IT platform to Clydesdale, for instance. Customer
numbers fell from 2.6 million in the first quarter of 2005 to 2.5
million by the first quarter of 2007.

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“We have done a lot of work to converge the back-office systems…
Being on different platforms constrained our ability to do much
around product development. We had to rebuild these banks four
years ago [but] have delivered,” said Reid, who joined the bank in

A new marketing tagline

In September this year, the transformation of Clydesdale and
Yorkshire stepped up a gear with the roll-out of a new marketing
tagline, ‘Always Thinking’, complemented with a fresh advertising
campaign and an assault on the current account market with the
launch of the bank’s first packaged current account. “We know it
has been a gap in our product line-up for some time,” said

‘Always Thinking’ was introduced by way of brand repositioning
following research among consumers and staff and, added Reid, is
designed to capture in a simple pitch what the bank has been doing
– “always thinking about how it can make its business a great place
to work for staff and a business its customers enjoy dealing

The launch of the Signature account is significant for NAB. It
signals an attempt to tap into the lucrative £1.2 billion UK
packaged account market, a market of some 10 million customers,
each paying an average of around £120 per year in fees for packaged
accounts. Spain’s Santander, which now has three brands in the UK
market (Abbey, Alliance & Leicester and Bradford & Bingley)
has also decided to attack this market (see RBI 601).

Over the past two months, NAB has signed up more than 20,000
Signature customers each paying £10 per month. The group is
promoting the account to its 1.7 million UK current account holders
as well as customers of other banks and, in contrast to Santander
which has limited promotion to online activity, NAB will sell the
account in-branch.

While the value-added elements of Signature such as travel
insurance, identity theft cover and breakdown insurance ring a
familiar bell, the account offers an innovative sweeping facility.
Surplus credit from customers’ current accounts are automatically
transferred to a linked savings account, offering an initial bonus
rate of an added 0.75 percent for an initial period on top of a
competitive headline savings rate of 5.3 percent.

“The sweeping element allows customers to make their money work
for them and ensures their cash accrues the higher interest of the
linked savings account,” said Reid.

Geographical imbalance

NAB UK has also sought to tackle the geographical imbalance of
its UK branch portfolio. It has expanded its southern operations
with the rapid expansion of its Financial Solutions Centres (FSC),
offering customers an integrated business and private banking
service, mainly situated away from the city-centre environment. The
bank now has 50 FSC’s – 16 in Scotland and 34 in the south of
England – compared with only two in 2003.

While customer satisfaction scores for the UK retail banking
industry as a whole have fallen in the past six months, Reid said
NAB customers’ scores for advocacy, trust and customer satisfaction
have bucked the general trend, and are up. The Clydesdale brand in
particular has been heavily promoted as a result of its biggest
sponsorship deal, the 2007 agreement to sponsor Scottish football’s
Premier League competition, previously sponsored by HBOS’s Bank of
Scotland brand.

“So far it has been hugely successful, Reid said. “It sent a
strong message to our staff. It enhanced brand awareness and helped
raise staff satisfaction levels. By more tangible metrics, it has
improved customer attrition rates. We remain extremely happy with
the deal.”