Lloyds brand cull moves up a gear

As predicted, the great brand cull at Lloyds Banking Group has begun in earnest with the closure of all 164 branches of Cheltenham & Gloucester. Lloyds claims the C&G brand itself is too valuable to sacrifice: the reality, now it is shorn of a high street presence, is that the brand is moribund. C&G has been dispatched into the hands of mortgage brokers, where it will totter on in a zombie twilight zone until Lloyds stealthily administers euthanasia. Lloyds is repeating the surgical treatment meted out to Clerical Medical a couple of months ago, only this time on a much more important brand.

Lloyds has no choice but to winnow its brands. It is overextended thanks to its merger with HBOS; under massive financial pressure – as much due to the recession as bad debts emanating from HBOS; and will soon find itself having to row back on market share, once the competition authorities have their say. The question is, which household name will be chopped next?

For more on the great brand cull laying waste the auto and financial services sectors, see my column in this week’s magazine.

Banking brands go into the red

¡Qué sorpresa! Spanish bank Santander is scrapping the Abbey, Bradford & Bingley and Alliance & Leicester brands. A&L will be the last to go, at the end of 2010, when Santander covers over the last rebellious traces of orange and blue with its comforting corporate red and ‘Mr Whippy’ logo.

The root-and-branch £12m rebrand seems to have come as a bit of a surprise to director of brand and communication Keith Moor  – who earlier this year made the mistake of pouring cold water on the idea – but it should not surprise the rest of us. (Does the UK right hand really know what la mano izquierda is doing back in Spain, by the way?)

Despite the fact that Abbey, B&B and A&L have a long, and largely honorable, legacy, they are in extra time as brands.

Santander already owned Abbey and had earlier put a stop to a fluffy, and largely purposeless, corporate revamp of the brand.

B&B and A&L were booty hauled out of the credit crunch. The very fact that they nearly went bust before acquisition also sealed their future as brands. In a world where credit is tight, there is less room for marketing to manoeuvre. There will be no easy money on the wholesale market for the foreseeable future to facilitate product differentiation; and every reason for bringing expensive, badly run organisations under a more efficient, and austere, banking umbrella.

Which is why Santander is having such a good recession. It managed not to overstretch itself during the seven fat years, and now it’s getting its pay-off during the seven lean ones. “Customers trust us as a global brand and they feel very safe about their savings,” says Antonio Horta-Osorio, chief executive of Santander’s UK operations. Exactly.

More intriguing is where this brand-culling activity leaves Lloyds Banking Group. As former chairman Sir Victor Blank can testify, the grand strategic union between Lloyds and HBOS is not all it appeared at the time it was consumated, there being a number of bottomless black holes in HBOS’ balance sheet. Lloyds, too, will be looking for prudent savings and we have already witnessed one of them in its decision to put Clerical Medical on the critical list. Intelligent Finance, the internet arm, could well follow. And – who knows? – Halifax itself may not be safe. There are no sacred cows these days, now that the bull market of all bull markets is over.