Money Insider: Rebranded Santander will keep up to speed
Saturday 16 January 2010
From Monday we saw Abbey and Bradford & Bingley (savings) officially rebranded as Santander UK plc, with the Alliance & Leicester part of the jigsaw due to fall in to place before the end of the year.
While some customers may find losing the familiar name tag of Bradford & Bingley or Abbey a little unsettling, I don't think they've got too much to worry about.
Santander is a global player with a prudent track record and has remained focused on business as usual while some competitors were distracted by the bank bailout fiasco last year.
The new combined bank will have around 25 million UK customers, so should be a major financial force on the high street and in a position to compete with some of the bigger and more established banks in this country.
There has been a noticeable increase in the competitiveness of products offered since Santander took control of Abbey with the Zero credit card and more recently the Zero charges current account option showing that they are serious about improving market share.
In recent years both Abbey and Alliance & Leicester have been extremely competitive in the current account and personal loan sectors and there's no reason that this rebrand should see that competitive edge diminish.
There may be concerns regarding lack of competition with three well-known banking names disappearing from our high streets during 2010 and being replaced by the single Santander brand, however with some new providers potentially entering the fray, possibly as soon as later this year (such as Virgin Bank, Tesco Bank, Metro Bank) the Spanish giant can't afford to become complacent or relax the competitiveness of its product pricing.
One of the stiffest challenges for Santander is to improve its reputation for customer service. It's an area to which they have paying particular attention, including the introduction of a state-of-the-art computer platform which allows staff to access all customer information from a single point.
Service is equally as important as the price of products in many people's eyes, so it's an area that Santander will have to get right.
The mortgage market continues to be a hive of activity, with the soon-to-be-merged Yorkshire and Chelsea building societies both bringing out attractive new products in the last seven days.
Yorkshire Building Society has a one-year fix at just 3.19 per cent and a very low fee of £195 at 75 per cent loan to value, a fairly niche product that may appeal to those who are happy to sit tight for a while longer. But with murmurings from some quarters predicting that base rate may start to rise as soon as late summer, a five-year fix at 4.99 per cent with £495 fee to 75 per cent LTV may turn out to be a more attractive proposition.
Chelsea Building Society has now joined the mêlée in the two-year fixed arena with a very keenly priced 3.75 per cent rate and £995 fee for anyone with a deposit of 25 per cent or more, while away from fixed rates, ING Direct is now a clear front runner in the two-year tracker market with a 2.54 per cent rate and £795 fee to 60 per cent loan to value.
Unfortunately it's not all positive news, with more lenders choosing to increase the rate charged on their Standard Variable Rate (SVR). The low interest rate environment has led to some smaller building societies making a difficult commercial decision to increase the rate on their SVR over the last few months and in some instances these now stand as high as 5.95 per cent.
Some people will be comfortable to remain on their lender's SVR, whereas others may be biding their time until a rate rise becomes more of a certainty before switching to the security of a new fixed rate product.
Positive news in the savings market has been in short supply in the first two weeks of 2010, with some fixed rate bonds being pulled and others seeing rates trimmed back. The best deal on a one-year bond now stands at just 3.65 per cent with FirstSave, whereas a couple of months back rates as high as 3.95 per cent were on offer.
Coventry Building Society is sitting at the top of the tree with the latest version of its popular 1st class postal account paying a variable rate of 3.30 per cent Gross/AER. This postal-operated account offers a decent rate, including a 1.30 per cent AER bonus for the first 12 months plus the flexibility of four penalty-free withdrawals each year.
The appetite for new savings has certainly fallen away recently with rates on fixed rate accounts and ISAs now starting to look a little tired. If the savings habit is to return, then we need to see a renewed appetite and some better rates from providers, and sooner rather than later.
Andrew Hagger is a money analyst at Moneynet.co.uk
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