What now for Barclays, Woolwich customers?

Barclays will spruce up its business with Woolwich's innovative banking models

by BBC business reporter Mandy Baker

Barclays and the Woolwich have not yet spelt out what this deal will mean for customers.

But it is clear that Barclays values the financial services offered by the Woolwich and that explains why it is willing to pay so much money.

It is likely that the Woolwich's innovative Open Plan scheme - which allows customers to offset credit balances against mortgages and other debt - will remain a key product.

The bank also wants to capitalise on the former building society's experience in internet banking, which has made it the acknowledged leader in that field.

This means there will be more scope for customers who bank with Barclays to open online accounts.

And the Woolwich brand will certainly remain.

Mortgage business

There is one main reason for the takeover: Barclays wants to get its hands on the Woolwich's mortgage business.

Until now, Barclays has been a comparatively minor player in the home loans market.

Now the Woolwich will become its mortgage brand, in much the same way Cheltenham & Gloucester has become Lloyds'.

Customers who wish to take out new mortgages with Barclays will now find they will be offered one from the Woolwich.

Barclays has also set its sights on the Woolwich's network of independent financial advisers.

Branch closures

About 100 Barclays and Woolwich branches will close.

However, the companies promise that this will only happen where there is substantial local overlap of the two and it looks like this will mostly be in the south-east of England.

While the services offered by Barclays will become more comprehensive, the industry investigator, Don Cruickshank says the takeover may not be good news.

He believes that larger banks will reduce competition and could make banking more expensive for the customer.