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When Paul Mayor received a phone call telling him he had won an all-expenses-paid trip to Royal Ascot for two plus accommodation for two nights at an exclusive London hotel, he thought his leg was being pulled.

It wasn't. Mayor was the winner of a draw for retail shareholders of Abbey, which has followed the example of its new Spanish parent, Banco Santander, and launched a comprehensive benefit scheme for small shareholders unlike anything seen before in the UK.

Anne Gorman, head of shareholder relations at Abbey, says her contemporaries at other organisations are amazed at the effort Santander puts into wooing its retail shareholder base. 'Santander believes customers and shareholders are one and the same,' she explains. 'In Spain you have to open a bank account to buy shares, and many of Abbey's retail shareholders are also customers. Santander believes customers are generally loyal, and that there is a knock-on effect if you treat them well.' José Rojo Aldea, director of UK shareholders at the group, also believes satisfied customers are satisfied shareholders.

Unexpected pleasures

For Mayor, who received his free shares when Abbey National converted to bank status back in 1989, it was an unexpected bonus. 'I said to my wife, Are you sitting down? when I rang to tell her,' he recalls. 'We couldn't believe it.'

All Abbey National members received either 100 or 200 shares when the building society floated on the stock market, and 1.32 mn still retain those holdings. Gorman, who had previously worked at Abbey National, was immediately despatched to establish a shareholder relations depar tment when the Spanish bank finally took control of the high street bank in a deal that gave shareholders one Santander share plus 31p for each Abbey share they held.

Some shareholders opposed the acquisition, arguing that the shares would now be listed in Madrid and their dividends would be paid in euros, which brought the problem of currency conversion. It was the first problem Gorman tackled.

Abbey launched the Santander Shareholder Account, paying a gross annual rate of 10 percent, where investors can elect to have their quarterly dividends paid; these are then used to buy additional Santander shares without incurring dealing costs. The bank also launched other financial products exclusively for retail shareholders, including dealing days on which they can buy or sell any shares for free.

This year Gorman wrote to all retail shareholders, inviting them to participate in prize draws for invitations to special events to celebrate Santander's 150th anniversary. 'We received more than 60,000 responses,' she says. 'Everyone who replied received a Santander key ring and a list of events on offer. We have since invited more than 1,000 to the Open Air Theatre at Regents Park, 300 to Formula One racing at Silverstone and about 500 to the Silverstone Classic.'

A handful was invited to Twickenham, while Mayor was taken to Royal Ascot. Shareholders were also invited to take part in a draw to win a pair of grandstand tickets to the British Grand Prix. To enter, they had to pop into a local Abbey branch and complete a mortgage survey. The 100 winners were also entered into a further draw, conducted by UK driver Lewis Hamilton, to win £100,000.

Shared benefits

Some shareholders, who received their shares almost 20 years ago, said they felt unable to participate in social events but wanted to pass on their invitations to other relatives. This prompted Abbey to launch the 'Pass it on' campaign, which allows shareholders to transfer their shares as a gift to a family member. 'As long as they retain 25 shares, they do not have to pay tax on the gift,' explains Gorman. A minimum of 25 shares must be transferred. Those who participate receive a free leather wallet and are automatically entered into a draw to win up to £15,000.

Abbey is also working with other suppliers to build up a loyalty programme for retail shareholders. Discounts are currently available on televisions and Spanish wines and delicacies, while tickets to Silverstone are being sold at a 20 percent discount to commemorate Santander's sponsorship of the British Grand Prix this year.

In Spain senior management and executives take to the road several times a year to meet retail shareholders. Santander is keen to introduce a similar scheme in the UK, and already private client stockbrokers and 100 retail shareholders have been invited to the National Gallery to meet and grill the executive team.

'At first, people were slightly suspicious,' concedes Gorman. They were also disappointed at the performance of Abbey, whose shares had more than halved from their peak before the bank was sold. 'But attitudes have really changed over the past year or so. From my point of view, we are seeing real feedback. People wrote to thank us for offering the chance to participate in a draw. Also, it gives me a chance to communicate with shareholders.'

While Abbey paid dividends twice yearly, Santander prefers a quarterly payment; it believes this provides an even income distribution. 'Before I used to write to shareholders twice a year, but now it's at least five times,' says Gorman. Santander also produces a special newsletter, Santander Sharenews, which is distributed to 10,000 shareholders every month and includes group news, Abbey news and details of exclusive products and promotions.

'The promotions are working,' says Gorman. 'Our shareholders are feeling positive about Abbey and Santander because we are doing something different and unusual for them.'

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