Santander is in the middle of a global brand-building exercise. In the UK, the Spanish group has used its sponsorship of the McLaren Formula 1 team to boost its brand association with its UK subsidiary, Abbey. It is also using high rates and new products to aggressively grow the Abbey franchise, says Douglas Blakey
It is one of the more successful turnaround stories in European banking: Santander’s pioneering cross-border acquisition of the UK’s sixth-largest retail bank (and second-largest mortgage player) Abbey in November 2004 for £9 billion ($18 billion). The Spanish group has restructured Abbey’s business to the point that Abbey’s profits reached €1 billion ($1.38 billion) net in 2006, a 23 percent rise from 2005. The unit accounted for 15 percent of Santander group profits.
Despite this success, the Santander brand, as its chairman Emilio Botin readily admits, is largely unknown in the UK. To improve brand awareness, Santander is mid-way through a global brand building marketing initiative and one of its biggest pushes is in the UK – Abbey has received 19 percent of the €40 million ($53 million) the bank is spending on the global campaign.
Santander has kicked off an advertising campaign on the back of its sponsorship of the British McLaren Mercedes Formula 1 (F1) team, using its star driver Lewis Hamilton to promote a new current account paying 8 percent. It has also run out a series of specific corporate branding ads highlighting Abbey as part of the Santander group.
The Spanish group, which this year celebrates its 150th anniversary (as is Spanish arch rival BBVA – see RBI 574), now boasts around 70 million clients worldwide and has introduced brand-building ads in the 14 countries where it is active in retail banking. Seven of them are in Latin America – Brazil, Mexico, Chile, Venezuela, Colombia, Uruguay and Argentina – and six in Europe – Spain, Portugal, Germany, Italy, Poland and the UK.
In the UK, the bank’s ad campaign has coincided with the start of its five-year sponsorship deal with the McLaren Mercedes F1 team. The bank’s latest UK television ads show different scenes of an F1 car being serviced and driven from the pits, with the Santander name shown prominently. As these scenes are shown, the Abbey name and F1 driver Hamilton are introduced.
Upping the ante The aim is not only to increase the brand awareness of Santander but to also push Abbey in the UK market. The bank has upped the ante in the competitive current account market with the introduction of an account that pays 8 percent interest, as it looks to make good its recent pledge “to be more aggressive commercially”. Abbey has also fired a shot in the battle for savings account customers by rolling out a Super Monthly Saver account, an account paying 10 percent interest.
The bank will pay 8 percent interest on current account balances of up to £2,500, but the new rate applies for 12 months only, after which the rate reverts to the bank’s standard interest rate – currently 2.5 percent. The new current account offer excludes student and graduate accounts and applies only to new customers who pay in at least £1,000 a month; they must also use Abbey’s current account transfer service.
“Our customers tell us a great rate is the most important thing when it comes to current accounts, and our 8 percent rate is the best out there,” said Steve Shore, Abbey’s head of banking.
Abbey’s eye-catching 8 percent rate compares favourably with the best rates currently on offer in the UK: 6.31 percent from Alliance & Leicester followed by Halifax, whose high interest current account pays 6 percent.
The bank is targeting the savings market with the launch of the Super Monthly Saver account, available only to existing Abbey customers and paying 10 percent interest. Savers are required to make 13 fixed monthly payments of between £20 and £250 in a row by standing order in order to obtain the 10 percent rate.
If account holders miss a payment, make a withdrawal or pay in less than £20 in any month, the rate drops to 0.10 percent on the account balance that month.
Develop good relations More than 1.3 million Abbey shareholders retained their shares after the Santander acquisition. The bank has sought to develop good relations with its UK shareholders by adapting a shareholder relations scheme operated by Santander in Spain. Abbey has developed a loyalty programme, where shareholders can purchase products such as televisions and wine at a discount and has also offered discounted tickets to shareholders for the British Grand Prix in July.
In addition, Santander has arranged for almost 2,000 UK-based shareholders to receive free tickets to a number of major sporting and cultural events, which the bank said was the first time a UK company had offered corporate hospitality to shareholders on such a scale.