Image makers

Following the launch of The Banker’s Top 100 Brands in banking league

table last November, we asked a number of banks how they value their

brands and define their brand strategies. Report by Michael Imeson

rademarks, brand names, intellectual

property and public image have been

important aspects of the financial

world for decades, but until the mid-

to-late 20th century they were rela-

tively crude concepts that in general

were not very well understood or

exploited.

How things have changed. Bank branding today, with its

public relations executives, spin doctors, marketers and

other ‘image makers’, is both a fine art and a highly devel-

oped science. It is an art in the sense that what makes a good

brand strategy has as much to do with gut feeling, smoke-

and-mirrors and intangibles as it has to do with carefully

laid-out plans and rigorous market research. And it is a sci-

ence in the sense that the value of a brand can be calculated

in highly technical ways and put to use by accountants and

solicitors.

In November, The Banker published its Top 100 Brands

listing. We joined up with brand valuation firm Brand

Finance to produce the first publicly available league table

analysing the financial value of the world’s leading bank

brands. Top of the table was Citigroup, with a brand value

of $35.1bn and a brand rating of AAA-minus, followed by

HSBC ($33.5bn, AAA) and Bank of America ($31.4bn,

AAA-minus). The top 20 most valuable banks in terms of

branding were all headquartered in the US (11) or Europe,

but lower down the ranking were banks from many other

FEBRUARY 2007 The Banker

24

brand strategy

regions, including six from Japan, five from Australia and

three each from Brazil, South Korea and Saudi Arabia.

The article supporting the table briefly analysed the

results and explained the methodology. Here, we ask banks

how (or whether) they measure their brand value, and what

their branding strategies are.

The world’s local bank

HSBC does not measure the financial value of its brand,

locally or globally. “Putting a value, in cash terms, on a

brand is useful if you use it to generate licence revenue,” says

Chris Clark, head of marketing planning and brand strategy

at HSBC Group. “Some businesses do that; they set up a

brand company in a country with a favourable tax regime.

That company then charges all its operating companies to

use the brand, which generates a revenue that is then spent

on marketing. Or they will licence a company to manufac-

ture goods for them.”

Putting a value on a brand for goodwill purposes is also

useful in an acquisition, says Mr Clark. But the disadvantage

of quantifying brand value outside these two situations is

that “it creates a stealth asset” on the balance sheet, which

could be seen by the tax authorities as a revenue item, and

then taxed.

“Your Top 100 Brands listing is useful, as it produces a

framework of judgement,” he says. “But the methodologies

that various consultancies use to calculate brand value are

open to some degree of interpretation. Your listing gives us

a brand value of $33.5bn. Yet Interbrand’s ‘Best Global

Brands’ values us at $11.5bn. There isn’t a publicly accepted

methodology that everyone seems happy with.”

HSBC’s brand strategy and image have come a long way

since the late 1990s, when it was what Mr Clark calls “a dis-
associated group of banks that carried completely different

flags around world” and it was decided to move to a single

brand identity around the world.

HSBC is a prime example of what Brand Finance calls the

monolithic style of branding, with just one name and one

visual identity around the world (though there are some

exceptions). The other categories are endorsed (such as

Santander, which uses several names endorsed with a group

name and visual identity) and pluralistic (like Royal Bank of

Scotland, with several different names but no obvious asso-

ciation with a group name).

“We are a good case study of how we have changed our

brand and managed it in a way that captures people’s imag-

ination,” says Mr Clark, who is a career ‘image man’ and

joined the bank six years ago from advertising agency

Saatchi and Saatchi. “We are proud of what we have done

at HSBC. The brand is very dear to the hearts of our cur-

rent chairman and chief executive, in the sense that it pro-

vides an organisation as diverse as ours with the glue by

which staff can have common values.”

Don’t forget the capital letters

Dutch bank ABN AMRO, 12th in our table, is another bank

that does not measure the financial value of its brand. “We

are not convinced by the methods used for measuring brand

values,” says Bob van Gessel, senior vice-president, group

communications. “Nor is there any accounting or regulatory

pressure to come up with such values.”

He says it is “interesting” to produce brand valuation

tables, like those of The Banker and other organisations,

such as Interbrand, but the figures that appear in the lists dif-

fer so much that it casts uncertainty on the concept.

ABN AMRO in some cases takes an endorsed approach to

its image, meaning that it uses several different names

around the world endorsed by the group brand name, logo

and visual identity. “The group strategy is one of a single

brand, ABN AMRO, but in five cases it is also expressed

through the historical name of an entity that has been

acquired,” says Mr van Gessel. “This is the case for Banco

Real in Brazil, LaSalle Bank in the US mid-west, for two pri-

vate banks in France and Germany, and more recently for

Banca Antonveneta in Italy, which in November announced

its new branding.”

Banca Antonveneta retains its formal name but in brand-

ing is now just Antonveneta. Its logos and signs carry the

‘Retail customers attach

more value to the manifest

localness of a bank than to

a globalised financial firm’

ABN AMRO name and famous green and yellow shield,

which symbolises reliability, tradition, protection and security.

“We consider these five banks to be part of the same

brand, endorsed by ABN AMRO,” says Mr van Gessel.

“The reason we have kept all the original names is that retail

customers attach more value to the manifest localness of a

bank than to a more anonymous, globalised financial firm,

though the endorsement conveys to those who are interested

the attributes and stability of an international bank with a

large capital base. It’s a best-of-both-worlds strategy.”

ABN AMRO is often written “ABN Amro” in the press

and by customers, with the second word in upper and lower

case instead of all capitals. Does that not demonstrate a fun-

damental failure in branding if people cannot get the letter-

ing right?

“That’s an interesting question,” says Mr van Gessel.

“The decision to capitalise the name goes back to when the

bank in its current form was created in 1990 and we have

stuck to that. The problem is that a number of newspapers

and magazines with closely defined editorial and spelling

rules rule out the possibility of capitalised acronyms that

contain four letters or more and which can be pronounced

as a word. They consider this form of capitalisation as a

covert attempt at advertising by making the name more

dominant on the page. No matter how we write ABN

AMRO, they will write it according to their own editorial

principles.”

Occupying the centre ground

Bradesco, 50th in our listing and the highest ranking

Brazilian bank, does measure the financial value of its

brand. “For us, the brand is a valuable asset that is directly

linked to our ability to create value for shareholders and >>

The Banker FEBRUARY 2007

25

brand strategy

clients, based on a positive presence in people’s minds,”

asserts Milton Vargas, vice-president and director of

investor relations. “Therefore, we use accompaniment mod-

els to measure its financial value.

“In general terms, we try to understand how the brand

works in the creation of profits and market value, in build-

ing a client relationship based on respect and ethics, and in

creating a harmonious environment among employees.”

The bank begins by verifying the value of the brand

locally and then extends this to making global valuations.

The process is complex and involves many variables in terms

of client surveys, financial performance indicators by oper-

ating sector and geographical reach, as well as fundamen-

tals, such as profit, efficiency and profitability ratios.

“The brand study published by The Banker gives us a

framework, as do similar reference models, such as eco-

nomic value added (EVA),” says Mr Vargas. “Generally

speaking, we want to know if the brand is strong enough

within our operating market, using our main competitors as

a reference, and its impact on profitability. The studies we

have undertaken, carried out by specialist companies we

have contracted, confirm and even surpass the value pub-

lished by The Banker’s study.”

Top in Africa

Standard Bank, 44th overall and the leading South African

bank in our listing, has received recognition in the past for

the success of its brand. In 2005, it was placed first in South

Africa’s Most Valuable Brands Survey, conducted by brand

strategy and design management company Interbrand

Sampson. The survey valued the Standard Bank brand at

R10,165bn ($1404bn).

“In this survey, brand value is premised on the argument

that brands, like any business asset, are valuable insofar as

they are able to generate economic benefit to their owners,”

says Nikki Twomey, director, brand marketing, at Standard.

“This evaluation is based on more than perception or popu-

larity; it demonstrates how brands, as key elements of cor-

porate wealth, can and should be considerable factors in

business strategy.”

In 2004, Standard Bank consolidated all its local and

international business operations under the Standard Bank

brand (or Stanbic Bank in some African markets). This

realignment provided several advantages, the most impor-

tant being promoting the bank’s business strategy of

continuously improving co-operation between the different

business units to ensure a customer-centric focus at

all times.

“In addition, it allowed Standard Bank to capitalise on its

reputation as a respected and recognised brand in South

Africa and internationally,” says Ms Twomey. “At the same

time, the Standard Bank vision and values were launched in

all 38 countries in which we operate.”

This monolithic branding strategy allows the bank to put

all its efforts behind a single brand. Research, both before

and after the change, was conducted among its corporate

and investment banking customers, who responded

favourably, with many of them emphasising that they tended

to see, and identify with, the brand as Standard Bank, and

not as SCMB, as its corporate and investment banking divi-

sion was previously known.

FEBRUARY 2007 The Banker

26

The beauty of brevity

ICICI, India’s second largest bank in terms of assets and

largest in terms of market capitalisation, came 66th in our

branding table, just a few places lower than the State Bank

of India, which came 61st. “The ICICI brand has only

really been developed in the past 10 years,” says Madhabi

Puri Buch, the bank’s group corporate brand officer.

Shortening the name was an obvious step, as it was too

long and no longer accurate. “We were originally a corpo-

rate bank – the Industrial Credit and Investment

Corporation of India – but in 1997 we moved into the retail

sector as well. We have had a consistent branding strategy

since then, which is to communicate a single proposition to

the customer: ‘We want to add value for you, and we will do

that by leveraging technology’.”

Ms Buch says that this single proposition manifests itself

according to the products offered and the customer

segments being addressed. On the retail side, there are three

ICICI follows the

monolithic approach to

branding, in that

everything is under the

one name and identity

key customer segments: urban Indian consumers, and more

lately rural Indian consumers and global consumers. ICICI

has a strong consumer business in the UK and Canada,

where there are many people of Indian origin, and a

consumer business in Russia. It also has corporate banking

activities in those countries.

“Our branding strategy follows our business strategy,” says

Ms Buch. In the mid-1990s, retail banking in India was

dominated by the public sector banks, which had a large cus-

tomer base, large branch networks and many employees, but

a restricted product suite. Foreign banks offered a wider

choice of services and products, but only to niche segments.

“When we entered the retail market, our business strategy

was to offer the same range of services and products as

foreign banks, but on a mass scale to the Indian consumer,

leveraging technology, and our branding strategy followed

that. For example, we have a wide ATM network of 2400

machines, and we were the first to offer internet banking and

one of the first to offer 24/7 call centre services,” she says.

ICICI follows the monolithic approach to branding, in

that everything is under the one name and identity. The only
exceptions are where it has joint ventures, such as ICICI

Prudential Life Insurance.

Ms Buch’s department measures the success of the two

tenets of its branding strategy – adding customer value, and

leveraging technology – through various “metrics” and mar-

ket research, some of it on a monthly basis across 12 Indian

cities. But it does not measure the financial value of the

brand, as The Banker has done.

“About four years ago, we undertook an exercise in brand

brand strategy

valuation which was aborted,” she says. “It was aborted

because we found there was no credible way of doing it. The

variance was too great, with the brand value coming out

anywhere between x and 10x. This high level of variability

meant it was inappropriate to attach a value to the brand

because we might mislead ourselves.

“But that was some years ago. Your Top 100 Brands made

us think that perhaps the methodologies have become more

sophisticated. Even if the absolute numbers in your table are

vulnerable to questioning, it is useful to see the relative posi-

tioning of the banks.”

Hiving off intellectual property

In 32nd place in our table is Standard Chartered. It is an

interesting case because in 2005 it created a separate com-

pany, Standard Chartered Strategic Brand Management

Ltd, to be responsible for the bank’s trademark policies,

intellectual property (IP) and ensuring consistent use of the

brand name. The bank licensed the IP rights of its brand to

this wholly owned subsidiary for $1465m, over 10 years.

Aidan Lisser, group head of brand development at the

bank, does not want to give details about how the financial

value of the brand is calculated or how the IP company

works because he says it is “commercially sensitive informa-

tion”. But he is willing to discuss strategy in general terms.

The bank’s “brand promise” is to be “the right partner,

leading by example”, says Mr Lisser. “Our brand represents

what we stand for and believe in. It is a promise that we

make to our customers and all our stakeholders. We believe

the brand is the umbrella for all we do and we use it to unify

and link together the organisation.”

Its latest branding campaign is focused on the theme of

teamwork and partnership. This includes sponsoring seven

marathons across its main markets. It also includes the

Seeing is Believing campaign, which aims to help prevent

avoidable blindness, reaching out to 10 million people across

20 countries in the next four years.

Meeting competition head-on

Al-Rajhi Bank, the Saudi Arabian bank that came 69th in

our global listing and top in Saudi Arabia, has just under-

taken a rebranding exercise, completed for it last autumn by

international image experts Enterprise IG.

“With 400 branches and more than 500 ATMs in the

Kingdom of Saudi Arabia, Al-Rajhi is the ‘people’s’ bank,”

says Hermann Behrens, managing director of Enterprise IG

Middle East. “But there was a need to revamp the brand to

recapture some of the market it had begun to lose. Other

local banks had been relaunching their brands, and Al-Rajhi

needed to do the same.

“Second, more overseas competition has been coming in,

such as Deutsche Bank, which it had to counter. Third, it

needed to improve its reputation for customer service.”

The solution included shortening the name from Al-Rajhi

Banking and Investment Corporation to Al-Rajhi Bank,

introducing a new typeface, creating a new icon that “looks

to the future, while respecting its Islamic values”, designing

new stationery and altering the design of its branches.

“Banks across the Middle East are reviewing their brands,

driven by increased competitive pressures, much of it from

abroad,” says Mr Behrens, who is based in Dubai, United

Arab Emirates. “Banks in the Gulf region especially have

performed incredibly well in the past two years and that is

funding their rebranding programmes.”

Laggards must catch up

So where does that leave us? First, this is an issue on which

there is no single view. Not only does every bank have a

unique brand, it seems that every bank and every brand spe-

cialist defines the term ‘brand’ in a different way.

“Some define ‘brand’ very narrowly, as ‘trademarks’ and

‘associated goodwill’,” says David Haigh, chief executive of

Brand Finance. “Some define ‘brand’ as all ‘marketing

intangibles including trademarks and other associated intan-

gibles’. Some define ‘brand’ as the ‘whole value of a business

trading under a particular trademark’. Some valuers do not

clearly define what they mean and their valuations are often

regarded as subjective as a result.

“For the purposes of The Banker’s Top 100 Brands, we

defined ‘brand’ in the most technically precise sense – as

‘trademarks and associated goodwill’,” says Mr Haigh. “We

did this to avoid arguments about vague asset definition.

Even in this narrow sense, the values concerned are very

large, which we felt was an important message for bank

directors to understand.”

Second, ‘brand’ is not just the preserve of marketing, PR

and communications people. There are a number of other

audiences in banks that have an interest in the financial

value of brands: those working in accounting, tax, legal and

commercial licensing.

The ‘image people’ tend to think in terms of overall

branding strategy and feel they do not need to attach a pre-

cise value to their brands; by contrast, the ‘numbers people’

have a real interest in knowing the specific brand values.

For the laggards, there is

only one solution: they

need to review their

brands and revamp their

marketing departments

Accountants, for example, need to understand the value of

brands the company has acquired to comply with IFRS 3,

the new accounting standard on acquisition accounting

(FAS 141 in the US has similar requirements).

It is the image-makers rather than the valuers who tend to

dominate. That is because bank boards, staff, shareholders

and customers all tend to focus on the broader picture:

brand strategy and image.

Banks are getting better at implementing such strategies,

and the best ones feature in our table. But far too many

banks are simply not up to standard. For the laggards, there

is only one solution: they need to review their brands,

revamp their marketing departments, give the marketing

men and women more power and, perhaps, employ the

TB

services of an external make-over artist.