HBOS chief exec admits merger problems

• HBOS Chief Executive says the bank should rethink the presentation of their Bank of Scotland branded products after staff and customers expressed concerns about the company's commitment to them

• Branch rebranding will extend BOS's reach in England and Wales but the branch at its Edinburgh HQ will not be saved

Key quote

"Mistakes were made and questions were raised, particularly in the branches." - Shane O'Riordain, HBOS general manager (group communications)

Story in full: THE chief executive of HBOS has acknowledged that the group underestimated the strength of the historic Bank of Scotland brand in the wake of its merger with the Halifax.

In a significant move, James Crosby conceded there had been concerns about the new group’s "commitment to Scotland, the business and the brand" - and signalled a rethink in the way Edinburgh-based BoS is marketed in the new group. This will include joint branding of branches in England and Wales, which had previously been labelled Halifax.

In an article for The Scotsman, Mr Crosby said that, in the haste to complete the 30 billion merger of BoS and Halifax, the group experienced "problems which have made life difficult for colleagues and disrupted our service to customers".

His comments reflect major concerns that BoS was effectively taken over in 2001 by the Halifax, rather than the deal being a merger of equals.

Mr Crosby said HBOS had been forced to re-examine day-to-day branch practices and key marketing initiatives after failing to appreciate the strength of feeling over the historic Bank of Scotland brand. He admitted, in the midst of integration, the "presentation of the Bank of Scotland brand and products in Scotland had not always met with the approval of all our customers and former colleagues".

Mr Crosby also said the double-branding of 700 branches in England and Wales would increase the presence of the BoS brand south of the Border.

Mr Crosby said, despite creating 3,000 new jobs since the merger, "a number of customers and former Bank of Scotland staff have recently expressed serious concerns - specifically over plans to restore our headquarters building (The Mound) in Edinburgh but more generally about our commitment to Scotland, the Bank of Scotland business and the brand".

As a result, it is now planning to re-think some of its marketing, although Mr Crosby would not go into any further detail.

Since the merger, HBOS has faced criticism that its Mound head office is more of a token HQ than a serious centre of operations. Last year, a high-profile group of former BoS executives launched a campaign against the decision to close the Mound branch, concerned by the takeover and its consequences on the BoS brand.

Mr Crosby admitted many of their fears had been taken into account. He said branch re-branding down south would "achieve a significant extension of the reach and presence of BoS as a financial services business and brand in the UK".

The Mound branch will not be saved, but Mr Crosby said the building would be "the nerve centre of HBOS for many many years to come", would house the same number of staff as now and "continue to host HBOS main board and executive board meetings".

Hugh Young, a former company secretary of BoS who led the Mound fight, said campaigners had been involved in drafting Mr Crosby’s letter, and changes to the bank’s strategy.

Mr Young said that, despite The Mound branch closure, he welcomed "clarification that it will continue to be used as a fully operational head office".

He was also pleased with the "real initiatives to address other concerns expressed".

Shane O'Riordain, HBOS’s general manager (group communications), said: the integration of BoS and Halifax in Scotland had proved "complex", adding: "Mistakes were made and questions were raised, particularly in the branches."