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Friday, 4 May, 2001, 15:35 GMT 16:35 UK
Bank merger 'good' for customers
Bank of Scotland headquarters, Edinburgh
The two companies will merge to form Britain's fifth largest High Street bank, HBOS.

By the BBC business unit's Clare Vincent

Friday's announcement that Halifax, Britain's biggest mortgage lender, and Bank of Scotland plan to merge to form Britain's fifth largest High Street is good news for customers, say consumer groups.

"Customers ought not to fear this merger in the same way as they have others," says Adrian Graves of the National Association of Bank Customers.

"Other bank mergers have been about consolidation, increasing market share, higher profits and branch closures. The aim has been to reduce costs."

"This is a merger of two organisations which are much more complementary to each other and have strengths in different areas," he says.

Halifax - city of London branch
Merger will mean greater choice for customers as both banks intend to cross sell their products

The sweeping branch closures which have marred many other mergers are also unlikely to cloud this deal as there is very little branch overlap between the two.

Currently Bank of Scotland has 360 branches and Halifax 800.

Cross-selling advantage

The move should also mean greater choice for customers as both banks intend to cross sell their products to each others' customers once the deal gets the green light.

So, for example, Bank of Scotland customers will be able to benefit from Halifax's life insurance expertise and Halifax customers can take advantage of the Bank of Scotland's unsecured lending and credit card skills.

The Consumers Association says the merger will also create a "Fifth Column" in banking to compete with the "Big Four" banks, Barclays, NatWest, Lloyds TSB and HSBC.

It hopes the new bank, to be called HBOS, will plough an alternative path and provide some much needed competition in the banking arena.

If HBOS does decide to shake up the market it could help put an end to some of the worst bugbears of bank customers such as slow cheque clearance times, says Adrian Graves.

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