W&GThe 250-year-old banking brand, Williams & Glyn, is set to reappear on the high street. The bank will be one of the UK’s largest banks but in the North West and Yorkshire – W&G’s historic heartland – its market share will be so substantial that it will effectively be vying for market leadership of the corporate sector with its current RBS stable mate, NatWest. The current speculation is that Williams & Glyn’s headquarters will be in Manchester but the RBS denies any decision has been taken.

As a condition of the State Aid received by the RBS Group during its liquidity crisis, the RBS has been forced into divesting itself of 308 RBS branches in England and Wales and six NatWest branches in Scotland: essentially what was the former Williams and Glyn network.

The new bank has received £600m in pre-IPO investment from a consortium of investors led by global financial services specialists Corsair Capital and Centerbridge Partners.

Williams and Glyn will launch with nearly 1.7 million customers and will employ around 4,500 people, which it has stated will rise to approximately 6,000 people once the new bank is fully operational. It has a loan book of circa £20billion funded by over £22billion in customer deposits.

Its customers are a mix of retail, SMEs (small and medium-sized enterprises) and a portfolio of mid-corporates. Williams & Glyn is expected to float on the London Stock Exchange within the next two to three years.

The bank was originally established in Manchester in the 18th century but in the 1960s was effectively reversed into by what was at the time a smaller RBS. The brand was steadily wound down and buried in 1985.

When the RBS acquired a bigger rival, the NatWest in 2000, the majority of the financial and media attention focused on the daring of the Scottish banks as the RBS and Bank of Scotland fought it out to acquire the NatWest. RBS emerged as victor and BoS subsequently went on to acquire the Halifax.

At the time of the RBS/NatWest deal however, a handful of regional commentators pointed out that the NatWest held between 25% to 30% of the corporate banking market in the North West and Yorkshire while the RBS, essentially via its W&G footprint, held over 20% meaning that the combined bank would be banking almost half of the corporate market in the North, a situation which would have been unacceptable had it been in London.

The RBS could not and would not confirm the  above market share percentages.

The deal, however, had far larger national and international ramifications and was cleared with no conditions attached to the RBS’s dominant position in the regions.

Williams & Glyn’s has stated that it will have a 2% share of the UK current accounts market and 5% of the small business accounts market but hasn’t broken these figures down further. It is likely however that it will have around 15% to 20% of the SME market in the North West and Yorkshire. Around 60% of W&G’s business is currently related to SMEs, something which will be reflected and enhanced in its marketing communications.

Major Manchester baseSpinningfields HQ

The decision on where the HQ will be located has yet to be announced but a number of the new bank’s central functions including HR, marketing and legal, will be based in the North.

The chief executive is John Maltby, formerly with Lloyds Banking group.

Although the bank has also not yet made any public decisions about the location of the main Northern operation, Prolific North understands that the RBS’s 140,000 sq ft building on Deansgate in central Manchester is currently the front runner to be the location for the central functions detailed above.

The bank has appointed Claire Moyles, previously head of brand and advertising at the RBS – and head of communications at Tesco bank (operated on behalf of the retailer by the RBS) – as head of brand for Williams & Glyn, with a remit to create a “brand centred around customers with great service and local communities at its heart”.

In simple English, W&G will promote itself as the bank for SMEs. Prolific North understands that the bank intends to radically buck the trend and reintroduce branch managers who actively seek to meet their customers and to reinforce this intent with actual substance by allowing managers more discretion over their local borrowing approval rather than processing all loan applications through credit committees elsewhere in the bank’s hierarchy.

Briefs for what is understood to be a £30m plus initial marketing and communications campaign were issued in January. Prolific North understands that unusually, in these days of specialist providers, W&G has opted instead to go for one integrated agency to handle its advertising, CRM, digital, media and print needs as the bank is concerned it may not be able to establish a fully operational in-house marketing and comms team by launch and its resources are thus likely to be stretched more than it might wish.

The bank is currently seeking further marketing and comms staff through a headhunter, John Denholm Associates, in Edinburgh. The headhunter declined to respond to a call from Prolific North.

The only exception to the above is PR which will be handled separately, offering opportunities for one or more agencies to offer support across financial, corporate affairs, B2B and consumer PR.

Publicis, WPP and McCann Manchester

Claire Moyles

Claire Moyles

The three agencies which have been publicly associated with the £30m pitch are the London offices of both Publicis and WPP and McCann Manchester. A spokesperson at McCann Manchester declined to comment. There has been no public statement about when the choice of agencies will be made.

Publicis has a limited presence in the North, primarily around health care communications, but WPP has a major presence with over 700 staff in the North spanning media buying (MEC and Mediacom), advertising (JWT Manchester) and research (TNS and Kantar). It also has the post-production company The Farm.

McCann Manchester is the largest integrated agency based outside London. Its latest filed accounts report turnover of £97m and ptp just shy of £3m.

The decision to establish Williams and Glyn’s headquarters in Manchester is a huge boost to the region: a development in size, scale and significance not dissimilar from the BBC’s decision to relocate several national departments from London to Salford.

Although it is likely that London will still remain the centre for the bank’s more complex financial instruments, the management team and the majority of operational units will be run from Manchester. This is likely to result in several hundred new and well-paid positions plus many more in terms of suppliers to the bank. And as stated above, W&G itself has stated it will be increasing its headcount from 4,500 to over 6,000 with the probability that many of these will be based in Manchester and its heartland in the North West, Yorkshire and to a lesser degree the Midlands.

An unquantifiable consequence currently is the RBS’s reaction to this upstart new kid on the block.

The RBS currently runs several national units, primarily administrative out of Manchester, and it is thought unlikely that it will jettison these national functions from what will be a markedly reduced presence in Manchester. Insiders who declined to be named told Prolific North that the RBS’s management teams based in London and Edinburgh are currently investing a lot of time in Manchester, advising RBS staff who will remain with the bank that they will be maintaining, if not enhancing the bank’s commitment to jobs in Manchester – and that excludes how the bank decides to respond through its NatWest brand to the emergence of W&G.

A more competitive banking sector

The reality is that NatWest is likely to increase its investment in its Northern infrastructure and marketing as indeed are the bank’s main corporate rivals: Barclays, HSBC, Lloyds and Santander.

Co-op Bank HQ

Co-op Bank HQ

Meanwhile, across town, the Co-op Bank, the subject of more press comment this weekend about the remuneration paid to its management team, is undergoing its own revolution. The bank, which is now majority-owned (70%) by a consortium of investment groups led by US hedge funds, is likely to emerge from its current travails in leaner shape with the prospect of its marketing and comms budget being sharply increased as the bank prepares for what will undoubtedly be a period of rapid growth demanded by its investors.

The Co-op, which is the UK’s eighth largest bank, currently has 2% of the UK market but it is inconceivable that its investors will settle for anything but a significant increase in the bank’s market share and ultimately profits.

Unlike W&G, the Co-op’s senior management team is now largely based in London but all of its operational units, including marketing, remain in Manchester and it is understood are likely to stay.

Yorkshire BankAcross in Leeds, the ongoing uncertainty surrounding the Yorkshire Bank continues.

The bank’s parent company, National Australia Bank,  has again recently dismissed speculation that it is lining up a £2bn flotation of its Yorkshire and Clydesdale banks subsidiaries.

Previous speculation suggested NAB was lining up a trade sale to the Spanish bank Santander.

Although there seems to be no imminent end to the Yorkshire Bank’s predicament, an analyst with the Australian investment bank Macquarie said that NAB was committed to its objective to sell the two UK lenders “but not at any price”.

The forthcoming probable changes at the Yorkshire, combined with the more fundamental changes taking place at the Co-op and Williams & Glyn, come at a time when bank lending is steadily rising, albeit largely on the back of the improving housing market; lending to corporates and SMEs remains weak.

The changes about to take place spell encouraging news for Northern corporates and SMEs.

A purple patch may just be in store for the North’s bankers and the customers they ultimately serve.