Barclays agreed to buy Standard Life Bank for £226m in cash last week after the insurer finally admitted defeat in its 11-year battle to establish itself as a significant player in the UK banking industry.

Even though the Edinburgh firm attracted thousands of consumers with its customer-friendly loan products and competitive savings accounts, it has suffered aggregate net losses of about £45m since its launch.

Barclays already has 15m customers with £84.4 billion of UK mortgages and £88.5m of deposits, and will now inherit further savings balances of £5.5 billion and a mortgage book of £8.8 billion.

We explain what the merger means for Standard Life customers.

Why did Standard Life sell up?

Even though Standard Life Bank was an instant success with customers — in the first 10 months of 1998 it attracted £1.5 billion in deposits — it struggled to make profits.

Sir Sandy Crombie, outgoing chief executive of the group, said the board no longer believed an expansion of the bank was consistent with the group’s long-term financial objectives and put the banking arm up for sale.

Despite ministers’ hopes that new entrants to retail banking could help trigger more competition, Barclays was the only one of the banking giants to step up to the mark.

Barclays said they had no plans to make any of the bank’s 270 Edinburgh-based staff redundant.

What happens to my savings?

Standard Life Bank has 287,000 savings customers, many of whom have big balances.

Barclays said that until the legal transfer of Standard Life Bank has been completed, the two groups will retain separate banking licences. After that, the licences will become one, which means that customers with deposits in both Barclays and Standard Life Bank would receive compensation of only £50,000 from the Financial Services Compensation Scheme (FSCS).

Michelle Slade at Moneyfacts, the data firm, said: “If savers have more than £50,000 with Barclays and Standard Life Bank they should consider moving money elsewhere before the licences become one.”

And my mortgage?

Barclays has netted itself a pretty good deal — Standard Life Bank has an £8.8 billion mortgage book with loans worth on average 48% of the property value and arrears of just 0.68%, the lowest in the industry. Barclays said Standard Life borrowers would be able to take their existing deal with them when the banks merge. A spokesman said: “Barclays will run the Standard Life Bank business as is, and the products and exceptional customer service will not change. We aim to integrate Standard Life Bank into Barclays in the long term. At that time, Standard customers will be offered Barclays equivalent or enhanced products.”

Nevertheless, experts agree that the deal could spell bad news for consumers, particularly as Standard Life Bank was a pioneer of consumer-friendly products, offering more flexible loans and a 25-year fix.

Ray Boulger, of John Charcol, the broker, said: “One of the dwindling number of brands still active in the mortgage market may disappear next year when the sale is concluded.”

What about my Standard Life pension?

Standard Life is the UK’s largest provider of self-invested personal pensions (Sipps), with funds worth £11 billion. However, some analysts were worried that a “significant proportion” of its Sipps assets were deposited through Standard Life Bank and customers might leave once the sale was completed.

David Nish, incoming chief executive, dismissed the concerns but analysts at Keefe, Bruyette & Woods, the broker, said: “We seek further clarity on the impact on Sipp margins from the sale.”

Customers withdrew £790m of Sipp assets from Standard Life during the first nine months of 2009, 26% more than the £623m redeemed during the same period last year.