“Bank Wars” in UK: Santander Denounces Advert By Rival Lender Criticising Out-of-Control Branch Closures

The Spanish banking giant doesn’t appear to have heard of the Streisand effect. Or perhaps it considers itself immune from the fallout. 

A few months ago, the British building society Nationwide ran an advert that appears to have ruffled the feathers of thin-skinned senior executives at one of its rival banks: Santander UK, the British subsidiary of Spanish banking giant Grupo Santander. The ad, intended to kick off Nationwide’s “A Good Way to Bank” re-branding program and starring Dominic West (known for his roles in The Wire, The Crown, and The Square, among others), showcases Nationwide’s renewed commitment to keeping branches open rather than closing them, as most of its rivals are doing.

West plays a pompous, self-entitled, expense account-abusing boss of a fictional High Street lender who, as the Daily Mail puts it, “treats his customers and staff with disdain and is obsessed with the size of his office and his lavish expense account lunches.” He proposes shutting down branches to save money and ridicules the plight of customers who lost their life savings.

As bank ads go, it’s not half bad. While perhaps a little over the top in places, it’s still pretty believable. In fact, it’s not hard to imagine big bank CEOs who are even more detestable behind the glass facades of their C-suite offices than West’s caricature. Fred “the Shred” Goodwin, the former CEO of Royal Bank of Scotland, springs to mind. He earned his moniker from his brutal restructuring of Clyedsdale Bank in 1998, and according to the Scottish journalist Ian Fraser, he had a “bizarre need to intimidate others.” In the end, his suicidally aggressive M&A strategy would lead to the collapse of RBS, one of Europe’s oldest lenders, after which Goodwin faced the ultimate ignominy of being stripped of his knighthood.

As you can see below, the Nationwide ad also delivers a few well-aimed digs at the UK’s financial sector as a whole, including one about banks’ prolific use of chat bots to “resolve” customer complaints:

But not everyone saw the funny side. The Spanish banking behemoth Grupo Santander’s UK subsidiary, Santander UK, has filed a formal complaint with the Advertising Standards Agency alleging the ad is “misleading about banks closing branches” and “discredits and denigrates” Nationwide’s market competitors. Senior management at Santander UK — and presumably, at the group’s headquarters in Boadilla del Monte, on the outskirts of Madrid — don’t appear to have heard of the Streisand effect (when attempts to hide, remove, or censor information backfire and end up increasing, rather then reducing, public interest and attention). Or perhaps they consider themselves immune from its fallout.

From the Sky News‘ article, “Santander Goes to War Over Nationwide Attack on High Street Banks“:

The complaint was filed during the autumn, soon after the building society campaign launched, according to insiders, but has not been publicly disclosed.

The ASA has yet to adjudicate on it.

It is relatively unusual for British banks to formally complain to the ASA about each other, and is far more common in industries such as food retailing, where the big supermarket chains have often objected to pricing claims made by competitors.

City sources said that a second TV ad from Nationwide would air in the coming days that would be “even more pointed” in highlighting the suggestion that banks have little regard for their customers.

British banks have closed thousands of branches in recent years amid declining usage among customers, but Nationwide — the country’s biggest building society — has pledged to keep its network intact.

The UK’s sixth largest lender by revenues, Nationwide did trim back its network between 2013 and 2023, from 737 to 605, but has since made a commitment not to close any existing branches between 2024 and 2026. It already has the largest network in the country, with more branches than HSBC, Europe’s biggest bank by assets and the UK’s biggest bank by revenues, Barclays (the UK’s second largest bank by revenues), Lloyds (#3), Standard Chartered (#4), Natwest Group (#5) and Santander UK (#7).

A Delicious Irony

In its complaint to the ASA, it is hard to see how Santander could possibly claim the ad is misleading. The UK’s high street banks have closed around 5,300 branches in the past eight years, leaving only around 4,000 still open, according to research by Which? magazine. They have also closed around 15,000 cashpoints, or ATMs, over the past five. Santander UK itself has been (in the words of The Times of London) “a radical branch-shutter,” shrinking its network from 1,186 in 2013 to 444 today.

It may have shut only six branches in the past two years and says it has no further closure plans, but that is only with regard to the UK. In its home market of Spain, Santander closed 1,252 branches in 2022, and now has a larger branch network in Latin America than in its four European markets (Spain, the UK, Poland and Portugal). At the end of that year, it posted record annual profits of €9.6 billion.

In Spain, the mass culling of bank branches reached such proportions that by early 2022 the country was home to the lowest number of bank branches (20,421) since June 1977 — 55% fewer than the historic high of 46,118, set in September 2008, the month Lehman Brothers hit the wall. Many banks had withdrawn cash services from some of their branches altogether.

By February 2022, elderly bank customers had had enough of having to jump through endless hoops and travel further and further afield just to access their own cash. So, they began protesting. In the end, as we reported at the time, they scored a partial victory against Caixabank, Spain’s biggest domestic lender:

In late December, a retired 78-year old doctor called Carlos San Juan organised a petition on change.org to call for “more humane treatment” in bank branches. This set off an avalanche of complaints from citizens and consumer protection agencies about the difficulties many of the country’s elderly and most vulnerable face in trying to access physical money, particularly in rural areas. The discontent became so widespread that calls began pouring in for “a payment card strike” on March 5, which spread like wildfire across social media and and messaging apps like WhatsApp and Telegram.

The irony was delicious: senior citizens using the latest communications technologies to call for a nationwide one-day strike in favour of cash payments. Given the importance of pensioners and senior citizens for Caixabank’s business — the bank is home to 30% of all domiciled pensions in Spain and the elderly tend to have a lot more capital and disposable income than the more digitally astute younger generations — the lender’s senior management has finally begun to change policy.

Bucking the Trend

Back in the UK, Nationwide, in launching its “Good Way to Bank” campaign, appears to have made three big but fairly safe bets: first, that public anger with the big banks and their management remains substantially high; second, that promising to deliver good customer service, and then actually doing so (still yet to be seen), is likely to be a good business proposition in a sector that has been dogged by low customer satisfaction for years; and third, that the war on cash is now a mainstream issue in the UK – so much so that Nationwide is willing to buck the general market trend and commit to preserving its branch and ATM networks, the two main means of access to cash for its customers.

As we recently reported, the use of cash in the UK actually rose in 2022 for the first time in over a decade. That this happened as most lenders continued to cull their branch and ATM networks while legions of retailers, both large and small, have refused to accept cash, which is perfectly legal in the UK, makes this moderate trend reversal all the more impressive. The government could, of course, step in and do what many state and local governments in the US have done and pass a law prohibiting businesses from not accepting cash. But that’s not happening. Instead, government is getting in on the act.

Many local authorities, for example, have already banned cash as a means of paying for parking. The government even recently proposed closing all rail ticket offices, which would force all passengers to use card-only vending machines or make their purchases online. But the idea triggered such a visceral backlash, particularly from organisations representing the blind, wheelchair-bound and other disadvantaged groups, that the government ended up shelving it two months later.

But still, even against this backdrop, cash usage has grown. The Post Office, which has  been offering intermediary cash services for banks in recent years, has seen a sustained surge in the amount of cash being deposited and withdrawn at its branches. In January, personal cash deposits totalled £1.42 billion in January — just short of the all-time record set for a single month, in September 2022, and up almost 8% month-on-month and 2.5% year-on-year.

Nationwide says it now operates the last bank branch (and free ATM services) in many British towns. The result in those towns has been a sharp rise in usage of Nationwide ATMs, including in Twickenham (+154%), Redruth (+144%), Purley (+92%), Broadstone (+80%) and Hunstanton (+77%). Usage is also on the rise, albeit more moderately, across the bank’s national ATM network, reports the bank:

Unlike the major banks which have closed significant numbers of branches in recent years, Nationwide has reaffirmed its commitment to communities by continuing to offer face-to-face service. Nationwide’s Branch Promise means everywhere it has a branch, it will remain until at least 2026.

Data from Britain’s biggest building society reveals around 31.4 million cash withdrawals were made from its network of more than 1,200 ATMs last year – a four per cent increase on 2022. The average amount of cash taken out on each withdrawal from Nationwide ATMs was around £105 last year, an increase on the previous year (+1%) that is below the current level of inflation. However, it is still up 28 per cent on 2019 (pre-pandemic).

It marks the second consecutive annual rise as 2022 saw the first rise in cash withdrawals for 13 years. Prior to 2022 the number of cash withdrawals had been steadily declining, most sharply at the start of the pandemic when the number of withdrawals at Nationwide ATMs dropped more than 40 per cent in a year (26.4m in 2020 v 44.5m in 2019).

Since then the British government has done the barest minimum to protect cash usage. But it is a different story in other European countries. The Spanish government, for example, passed a law in May 2022, just months after the pensioners’ protests, obligating all retail establishments to accept cash as payment. The governments of Slovakia, Switzerland and Austria have tried or are trying to enshrine the use of cash in the national constitution.

The latest source of good news for cash lovers comes from across the Irish Sea where the Bank of Ireland, a commercial lender, has announced plans to set up 664 upgraded ATMs at its branches throughout the Republic of Ireland and Northern Island. The bank believes this will help improve cash processing capacity as well as cut energy use by half, with the machines “recycling” cash by using deposited notes for withdrawals. As in the UK, cash usage in Ireland may be in the process of rebounding, in part due to the cost of living crisis.