Abbey lights a flame to fan hopes

Abbey National is to be rebranded by its new Spanish owners barely 18 months after a previous relaunch intended to reinvigorate the high-street bank.

As it returned to the black for the first time in two years, Abbey announced it would adopt the flame symbol of Banco Santander as well as the Spanish group's red corporate colours.

All the bank's 726 branches will be rebranded from May at a cost of £8.5m. The previous exercise, for which branding agency Wolff Olins received £500,000, cost £11m to implement while another £15m was spent on advertising.

Abbey, returning to the upper case "A" ditched under the last move, displayed the new-look, intended to show the "strength, stability and leadership" of Santander, at its London head office.

Abbey had already announced the departure of Angus Porter with a near-£1m final pay cheque. That director played a key role in the previous rebranding which led to the umbrella logo being axed. Mr Porter joined from BT. While at Mars he had rebranded Opal Fruits as Starbursts.

The new plan was unveiled by Abbey chief executive Francisco Gomez-Roldan, the Santander executive parachuted into the top job when the Spanish took control in November. He announced plans to boost Abbey's flagging sales by hiring new sales staff. He also intends to launch new mortgages into riskier areas previously shunned by Abbey - such as buy to let.

Lord Burns, who has remained as the Abbey chairman, insisted the new look was not an indication that the previous rebranding exercise - intended to "turn banking on its head" - had failed. "We had some pretty positive responses," he said. "Particularly from younger customers."

In addition to hoisting the new logo on its branches, Abbey will begin refurbishing 250 outlets initially. It also intends to relocate one in four of them.

Mr Gomez-Roldan also wants to stop the high staff turnover, which at 17% is higher than the industry average, and is accelerating job cuts. Some 2,000 of the 3,000 roles earmarked for cuts by the Spanish bank when it took control of Abbey in November will be identified by the end of March and cost savings for the year will rise from £100m to £150m. An unidentified number of its 25 call centres will be closed down and Mr Gomez-Roldan left a question mark hanging over 560 positions at Indian call centres.

The bank blamed "business disruption" and unspecified frauds for a 20% decline in profits to £814m in its core retail business in 2004. In the fourth quarter it also made a £154m provision, in part to help cover the potential mis-selling claims.

The troublesome bond investments which had driven Abbey to a loss in the previous two years made a profit of £23m compared with a £921m loss in 2003. It will keep Porterbrook, the train leasing business. The shrunk bond division allowed Santander to report a statutory profit before tax of £273m compared with a £686m loss in 2003.

Abbey's sales figures show that its mortgage business slumped in the fourth quarter while for the whole year its market share fell to 8.6% from 10.7% in 2003.

Some 90% of Abbey's shareholders received one Santander share and 31p in cash as a result of the takeover in November. Others sold their shares before the deal completed. Abbey, which hopes to have a secondary listing of its shares in London by the summer, said yesterday the shares were now worth 40% more than in July before talks about the takeover leaked.