Soaring Santander must treat its new customers right to keep them

Outlook

Dynastic succession is not generally a good way to be selecting your top executives. Santander might just be the exception to that rule.

Ana Botin was able to unveil a 50 per cent jump in net profits in the first set of results she has presided over since taking over the job from her late father.

It would be quite ridiculous to suggest that someone can just waltz in, wave a magic wand and produce numbers like that after a few months. There are many reasons for the profit jump, some of which will have nothing to do with Santander’s executives, regardless of what they would have you believe.

But what is notable is that over a longer period – the first nine months of the year – Santander UK has been a very strong performer. Santander UK was the part of the business run by Ms Botin prior to her taking on the top job.

Ms Botin has successfully positioned the operation as a challenger bank, even though it isn’t. Being made up of Abbey National, Alliance & Leicester and bits of Bradford & Bingley, it’s actually very much a part of Britain’s banking establishment.

But it’s amazing what you can do simply by changing your trading name from Abbey to Santander UK.

It’s status as a challenger – whether deserved or not – is one reason why Santander can claim to be picking up one in four of every current account that switches. With TSB – another “new” bank that has been spun out of Lloyds – gobbling up a larger than expected slug of the rest, it seems that the challengers are in vogue with customers.

Whether they will notice much different in terms of service remains to be seen. Current accounts are fairly simple products, although certain banks still manage to muck them up (I’m looking at you Royal Bank of Scotland/NatWest).

The problems usually start to occur when banks try to make money by selling additional products, such as, I don’t know, payment protection insurance. The challengers are merrily picking up business from their larger rivals, and the sort of competition they offer to the so-called “big four” is a thoroughly good thing.

But their real challenge now is to treat all the new customers they are attracting properly when they’ve got their hooks into them. Otherwise their rise to prominence won’t matter all that much.

Primark keeps Weston dynasty in fine clothes

Primark is proving once and for all that British retailers can make a success of moving beyond these shores.

They might operate in very different sectors, but its success in Europe is not dissimilar to the success Aldi and Lidl are having over here.

“Magnificent,” is how owner Associated British Foods described its most recent results, with the discount clothes seller’s growth driven by its continental land grab. You wouldn’t want to bet against the brand enjoying similar success in America as Primark prepares for the conquest of the New World.

“Phew,” is probably what they were saying at the boardroom having crunched the numbers, and not just as a result of the warm autumn that appears to have done nothing to dent Primark’s momentum by contrast to its main rivals. It’s because the performance of ABF’s sugar business has been less than stellar, hit by a perfect storm of declining world sugar prices, lower volumes and unfavourable exchange rates.

People have for years been wondering about a spin-off of Primark, given how out of step with the rest of the business it is, but it won’t happen any time soon. It’s success softens the blow and diverts attention from difficulties in the rest of the business.

More to the point, such a move might well clip the wings of the Garfield Weston dynasty. Powerful families like that get accustomed to sitting in the Royal Box, and not the stalls. Primark helps to keep it there. Not that you’re likely to see any of Primark’s wares on display in said box.

Shareholders may raise a glass to Greene King deal

Glasses raised, then, to Greene King – at least in the City where they always toast a deal because the fees are just dandy. So dandy you can be sure it won’t be beer that its bankers will be quaffing.

Deals like this keep the show on the road, they’ll tell you. What’s that you say? Shareholders? Who cares about them? They used to be down the hall when we owned a fund manager. And we’ll be buying our old colleagues’ drinks tonight to keep them sweet. But, really, they’re not worrying. If it all goes pop it’s only the tiniest proportion of their fund and the people in the fund will only see a few quid less on their pensions. More fool them, what? And so it goes.

At least the sector’s bosses appear to have learned something.

It’s true that Greene King is paying a fancy price to keep its Spirit up – a 50 per cent premium to its new partner’s shares before the offer period commenced. The multiple of Spirit’s expected earnings is also a chunky one when compared to the sector average. Crucially, Greene King is largely paying for Spirit’s pubs in shares, rather than cash. The premium won’t matter so much if its targeted cost savings come to pass, and it can squeeze its suppliers for better deals. Thank goodness for that then.

Maybe the shareholders will be able to raise their glasses after all and it’ll only be the employees and those suppliers who’ll suffer as a result of this one.