We've sold you to Spain
How do you ditch a customer you value without causing offence?
It's not a question that troubles many businesses. Most want to retain valued customers, or ditch duff ones.
But it's a tough challenge facing the Royal Bank of Scotland, as it jettisons more than two million of its customers.
They're the ones attached to the 318 branches and a handful of business banking centres that RBS is being forced to sell off.
This was, you'll recall, a condition placed on it by the European Commission, in return for approving the UK Government's bailout.
Earlier this month, it agreed to sell them to Santander.
And as some respondents to the Ledger have already pointed out, they don't want to be "sold" by the banks.
They chose to bank with RBS, and not with Santander.
And elsewhere, it's reported that some have been angered and offended to receive a high-handed letter from RBS to say its selling them.
Would the Spanish government bail out British savers in the way the UK government did, asked one customer?
Inadvertant marketing trick
The problem for the Royal Bank is one of the rules under which it's disentangling the 318 branches, 2% of the UK retail market and 5% of the business market, from its continuing operations for NatWest and the RBS brand in Scotland.
It's not allowed to solicit business from those customers who have been with those branches.
So it's not allowed to add a paragraph to those "high-handed" letters saying "actually, if you'd prefer to stick with RBS rather than Santander, here's a number to call..."
If it did, it would be reducing the valuation of the asset it's selling.
It seems RBS can't win. It's angered an entire nation with its recklessness. Now it's angering its customers by "selling" them.
But then, maybe it's an inadvertant marketing trick - increase people's loyalty to RBS by threatening them with Spanish ownership instead. Perhaps other companies should try this.
Financial harvest
Incidentally, on the bank lending front, note an interesting finding of Scottish government statistics that shows lending to agriculture has grown since last year at the fastest pace for ten years.
That's up nearly 9% to more than £1.5 billion - or £120m more lending.
With the survey tending towards larger farms, it leaves bank borrowing around the same level as the average for the past 20 years.
Banks account for 60% of farmer liabilities, which averages out at £52,600 owed to the bank, and £37,300 owed in hire purchase, leasing, to family members and others.
With agriculture prices showing a healthy upside, it's one sector that's quietly been having quite a good downturn.
Hullo, I'm Douglas Fraser, and I'm business and economy editor at ³ÉÈË¿ìÊÖ Scotland. Welcome to my blog, where you can read my take on money matters, viewed from a Scottish perspective.
Comment number 1.
At 14th Aug 2010, BluesBerry wrote:This deal really has my head spinning. I keep asking why?
RBS has sold 318 of its branches (as required under EU competition rules). The sole bidder was Santander, which recently subsumed Abbey and Alliance & Leicester.
Why must this happen?
The European Commission decided that, under its competition laws, the banking giants RBS and Lloyds had to be broken up, creating more competition within the banking sector. This is really an attempt to eliminate that ugly probability: "too big to fail".
Is selling accounts to Santander going to increase competition?
Well now...ah...no...When the need for sale was first announced, there were plenty of potential bidders - mainly RBS' Williams & Glyn, Virgin and Tesco banks, but eventually there was only one. Santander is already a major presence in UK banking; so it is not clear (to me) how this is going to increase competition or have competition benefit consumers.
The Government said earlier this year that it would only sell to new entrants to the UK banking market. Both Santander and National Australia Bank were not originally on the short-list because these two already had wide presence in the UK. (NAB owns Clydesdale and Yorkshire banks).
The Santander purchase will boost Santander's network from 1,300 to 1,600 - just a squeak behind UK's biggest network – Lloyds at 1,800 branches.
It seems to me that this sale does not auger well for savings accounts because as far as I can tell, the £50,000 separate savings compensation coverage will be subsumed into Santander; so savers with cash in both banks will be in fact less protected.
In the coming months, RBS is supposed to write to all RBS customers (in fact it must under the Financial Services & Markets Act) to ask about concerns. You can stay with RBS, but you will not likely have a local bank of convenience because the local RBS will now be Santander. RBS has been given until 2013; but I wouldn't look for any change this year.
The sale price has not been officially disclosed, but Santander is believed to be paying between £1.5bn & £1.8bn, which is below the initial £2bn price tag. (In the end, there was just one bidder.)
I just don't get the logic of this deal; maybe someone out there can explain it to me.
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Comment number 2.
At 14th Aug 2010, mike boothroyd wrote:I have had very limited dealings with Santander but, on the basis of these, I have to say that their reputation for administrative inefficiency is well deserved.
I'd happily recommend anyone who has been "sold on" to them to make alternative arrangements a.s.a.p., but not to expect it to be a smooth process.
Expect to receive no reasons, explanations or apologies - just interminable delays and a complete loss of interest (that's your interest earnings by the way) as your balance floats around the Spanish pennisular for months until some clerk in Barcelona finally presses the right button.
Their administrative practices must add billions to their bottom line each year.
You have been warned.
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Comment number 3.
At 22nd Aug 2010, lancastrian123 wrote:I have already decided to stay with the RBS Group. I have just finished moving my accounts 300 yards down the road to the NatWest Bank. Although I am far from a rich person, I choose to bank with what was then William & Glyns, they were rebranded RBS, as they were already owned by them. That was OK with me, they were a Bristish Bank.
Now the the enforced sale of the RBS England & Wales, NatWest Scotland by the EUSSR, I decied to take action. I had no wish for my accounts to be run by a foriegn bank, especially not by Santander, who have already gained quite a reputation for not considering small account holders very well.
So despite all the statements 'that nothing will change' I have made sure that I am in control of my choice of bank and not anyone else.
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Comment number 4.
At 23rd Aug 2010, James wrote:This is yet another stitch-up by the money men, designed to ensure that Joe Public pays through the nose for what should be cheap and basic financial services. I gave up on them all ages ago and now bank with the North Lanarkshire Bank, run by the Local Authority. You get a decent rate of interest, there are loads of branches in the area and you can speak to the manager in person.
It's time we all voted with our feet and went back to supporting the banking Co-Operatives.
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Comment number 5.
At 24th Aug 2010, andy wrote:I would recommend anyone who's had Santander pushed onto them to move their account elsewhere a.s.a.p. I unfortunately have had dealings with them in both Spain and the UK. A terrible bank.
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