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marketing head and Nike advertising director, states in his Express with $18.1bn. These four are the only four institu-
recent book: “I can think of no better organising princi- tions to achieve a triple ‘A’ brand rating, which is desig-
ple for a company than the brand itself.” A well-managed nated ‘extremely strong’ according to the above
brand is seen to mobilise all of a company’s stakeholders methodology. Citigroup and HSBC are seen as good exam-
(employees, customers, investors, etc) to create value. ples of how fragmented and undifferentiated banks have
become well-liked and valuable international bank brands.
Not just a name The report, based on analysis of the world’s 500 largest
A brand is much more than the name above the door. It banks by market capitalisation plus other market players,
is now acknowledged to be responsible for driving cus- excludes Chinese bank brands this year due to lack of data
tomer acquisition, reducing customer churn rates and and also excludes market cap data where the brand is one of
staff turnover, thereby increasing profitability and help- several brands owned by a group. Analysing the results, the
ing to influence analysts’ and investors’ perceptions. This top 20 most valuable banks in terms of branding are all
month, The Banker has joined with leading UK-based headquartered in Europe (nine) or the US (11), and a total
independent brand valuation firm Brand Finance to pub- of 72 brands come from Europe and the US. Of the rest, six
lish the first publicly available table analysing the finan- came from Japan, five from Australia, and three each from
cial value of the world’s top 100 brands. Brazil, Korea and Saudi Arabia.
For the first time, the top 100 most valuable brands list- Although brand values fall away significantly after the
ing provides not only detailed valuations of intangibles top 20, investment and wholesale banks display surpris-
using a transparent methodology (‘royalty relief ’) that has ingly large brand values. This is due to the lack of large
been deemed ‘fit for use’ by tax and law courts around the retail networks, infrastructure and similar tangible assets,
world, but also offers institutions the opportunity to cre- and to much of their value being intangible and linked to
ate new models to manage their intellectual property (IP) key personnel and brand.
needs better.
Brand Finance’s CEO, David Haigh, believes the Brand value and market cap
greater focus on marketing intangibles, the impact of In assessing the ratio of brand value to market cap, credit
IFRS3 accounting standards and their effect on mergers card-oriented bank brands display the highest ratios
and acquisitions planning and integration, are leading because non-rational and image-related factors are
banks to establish separate IP companies. These brand- regarded as significant drivers of demand in this sector.
holding companies provide brand control, help with tax For the same reason, consumer-focused banks are gener-
issues and planning for acquisitions. Although there are ally regarded as having higher brand value/market cap
few such companies at present, Mr Haigh says that their ratios than business focused banks.
numbers are growing, and Standard Chartered Bank has American Express has the highest ratio, 28.5%; and 13
recently taken this route. of the top 20 have ratios that exceed 14%. Explanations
The valuation of brands in banking also helps to create for both high and low ratios could be quite complex, how-
new frontiers in franchising. Unlike the brand owners of ever, due to the complicated brand royalty methodology.
athletics clothing, banks have done relatively little to For example, ABN AMRO has the second highest brand
leverage their brands, and concentrate on brand manage- value to market cap, reflecting the combination of a low
ment and design innovation. Although there are serious stock market valuation, a top quartile brand score and a
regulatory considerations, franchising has also been virtu- relatively high proportion of consumer banking, which
The Banker’s first Top 100 Brands provides an analysis of the value of branding to financial ally ignored by banks, but given proper valuation models commands a higher royalty than wholesale banking.
institutions, an asset that many banks fail to leverage. Stephen Timewell examines the results this area could be explored as a way to boost value from All three Saudi Arabian banks have low brand value
brand management. ratios as a result of having high market caps relative to
reported revenues (the stream of notional royalties that is
f money is fungible and banking institutions pro- But although The Banker and others have produced The most valuable brands discounted back to calculate trademark value is calcu-
I
vide a broadly similar range of products and numerous listings on banks’ relative size, earnings and So what are world’s most valuable banking brands and lated as a percentage of net revenue). The six Japanese
services built around money, then how do these structure, and rating agencies have provided copious listings why? The top three banking brands are Citigroup, HSBC banks have low brand value ratios due to the combined
institutions differentiate themselves? Why is one of relative risks, detailed valuations of banks’ intangible and Bank of America, which are also the leading three effect of a relatively high discount rate in the discounted
bank preferred over another? For years, banks assets, in particular their brands, have remained elusive. banks in The Banker’s latest Top 1000 World Banks rank- cashflow model due to a high equity risk premium in
have traded on their name, reputation and loyal Caught up in deep-rooted traditions and analysis of ing based on Tier 1 capital (The Banker, July 2006, p224). Japan, a low terminal growth rate driven by low gross
customer base, often not realising that these their tangible assets, banks have often been slow to realise The brand value of the three banks is $35.1bn, $33.5bn domestic product (GDP) growth and a relatively high cor-
intangibles are probably their most valuable the power and strategic importance of their ‘softer’ or and $31.4bn respectively (based on Brand Finance porate tax rate of 41% applied to the stream of notional
asset and also the key to their competitive edge. intangible assets. Scott Bedbury, former Starbuck’s methodology, see page 23), well ahead of American royalties. >>
marketing head and Nike advertising director, states in his Express with $18.1bn. These four are the only four institu-
recent book: “I can think of no better organising princi- tions to achieve a triple ‘A’ brand rating, which is desig-
ple for a company than the brand itself.” A well-managed nated ‘extremely strong’ according to the above
brand is seen to mobilise all of a company’s stakeholders methodology. Citigroup and HSBC are seen as good exam-
(employees, customers, investors, etc) to create value. ples of how fragmented and undifferentiated banks have
become well-liked and valuable international bank brands.
Not just a name The report, based on analysis of the world’s 500 largest
A brand is much more than the name above the door. It banks by market capitalisation plus other market players,
is now acknowledged to be responsible for driving cus- excludes Chinese bank brands this year due to lack of data
tomer acquisition, reducing customer churn rates and and also excludes market cap data where the brand is one of
staff turnover, thereby increasing profitability and help- several brands owned by a group. Analysing the results, the
ing to influence analysts’ and investors’ perceptions. This top 20 most valuable banks in terms of branding are all
month, The Banker has joined with leading UK-based headquartered in Europe (nine) or the US (11), and a total
independent brand valuation firm Brand Finance to pub- of 72 brands come from Europe and the US. Of the rest, six
lish the first publicly available table analysing the finan- came from Japan, five from Australia, and three each from
cial value of the world’s top 100 brands. Brazil, Korea and Saudi Arabia.
For the first time, the top 100 most valuable brands list- Although brand values fall away significantly after the
ing provides not only detailed valuations of intangibles top 20, investment and wholesale banks display surpris-
using a transparent methodology (‘royalty relief ’) that has ingly large brand values. This is due to the lack of large
been deemed ‘fit for use’ by tax and law courts around the retail networks, infrastructure and similar tangible assets,
world, but also offers institutions the opportunity to cre- and to much of their value being intangible and linked to
ate new models to manage their intellectual property (IP) key personnel and brand.
needs better.
Brand Finance’s CEO, David Haigh, believes the Brand value and market cap
greater focus on marketing intangibles, the impact of In assessing the ratio of brand value to market cap, credit
IFRS3 accounting standards and their effect on mergers card-oriented bank brands display the highest ratios
and acquisitions planning and integration, are leading because non-rational and image-related factors are
banks to establish separate IP companies. These brand- regarded as significant drivers of demand in this sector.
holding companies provide brand control, help with tax For the same reason, consumer-focused banks are gener-
issues and planning for acquisitions. Although there are ally regarded as having higher brand value/market cap
few such companies at present, Mr Haigh says that their ratios than business focused banks.
numbers are growing, and Standard Chartered Bank has American Express has the highest ratio, 28.5%; and 13
recently taken this route. of the top 20 have ratios that exceed 14%. Explanations
The valuation of brands in banking also helps to create for both high and low ratios could be quite complex, how-
new frontiers in franchising. Unlike the brand owners of ever, due to the complicated brand royalty methodology.
athletics clothing, banks have done relatively little to For example, ABN AMRO has the second highest brand
leverage their brands, and concentrate on brand manage- value to market cap, reflecting the combination of a low
ment and design innovation. Although there are serious stock market valuation, a top quartile brand score and a
regulatory considerations, franchising has also been virtu- relatively high proportion of consumer banking, which
The Banker’s first Top 100 Brands provides an analysis of the value of branding to financial ally ignored by banks, but given proper valuation models commands a higher royalty than wholesale banking.
institutions, an asset that many banks fail to leverage. Stephen Timewell examines the results this area could be explored as a way to boost value from All three Saudi Arabian banks have low brand value
brand management. ratios as a result of having high market caps relative to
reported revenues (the stream of notional royalties that is
f money is fungible and banking institutions pro- But although The Banker and others have produced The most valuable brands discounted back to calculate trademark value is calcu-
I
vide a broadly similar range of products and numerous listings on banks’ relative size, earnings and So what are world’s most valuable banking brands and lated as a percentage of net revenue). The six Japanese
services built around money, then how do these structure, and rating agencies have provided copious listings why? The top three banking brands are Citigroup, HSBC banks have low brand value ratios due to the combined
institutions differentiate themselves? Why is one of relative risks, detailed valuations of banks’ intangible and Bank of America, which are also the leading three effect of a relatively high discount rate in the discounted
bank preferred over another? For years, banks assets, in particular their brands, have remained elusive. banks in The Banker’s latest Top 1000 World Banks rank- cashflow model due to a high equity risk premium in
have traded on their name, reputation and loyal Caught up in deep-rooted traditions and analysis of ing based on Tier 1 capital (The Banker, July 2006, p224). Japan, a low terminal growth rate driven by low gross
customer base, often not realising that these their tangible assets, banks have often been slow to realise The brand value of the three banks is $35.1bn, $33.5bn domestic product (GDP) growth and a relatively high cor-
intangibles are probably their most valuable the power and strategic importance of their ‘softer’ or and $31.4bn respectively (based on Brand Finance porate tax rate of 41% applied to the stream of notional
asset and also the key to their competitive edge. intangible assets. Scott Bedbury, former Starbuck’s methodology, see page 23), well ahead of American royalties. >>
rating
Brand
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
AA-
AA-
AA-
AA-
AA-
A+
A+
A+
A+
AA
BB
BB
BB
BB
BB
BB
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
architecture, which Brand Finance divides into three cat- Grupo Santander in fourth place. Royal Bank of
A
B
B
egories: monolithic, endorsed and pluralistic. The mono- Scotland + NatWest combined would reach 12th place.
Brand value/
lithic approach, as typified by HSBC, Barclays and Which approach is best? All three have their advocates
cap (%)
market
9.8%
16.1%
14.7%
8.6%
11.3%
12.4%
5.3%
7.7%
7.8%
N.A.
18.8%
7.5%
N.A.
7.8%
6.2%
15.4%
N.A.
11.6%
2.6%
14.6%
9.9%
13.6%
8.3%
6.8%
5.6%
10.6%
9.2%
8.4%
9.5%
10.4%
8.5%
14.0%
3.5%
7.7%
5.0%
5.4%
8.3%
7.9%
6.8%
4.4%
6.6%
8.6%
5.3%
5.1%
6.5%
1.8%
7.0%
1.7%
3.2%
2.3%
Fortis, with one name and one visual identity, contrasts but there is no definitive winner, except that the top five in
with the endorsed style of ABN AMRO and Santander, the list are either monolithic or endorsed. As more and
which use several different brands endorsed with a group more bank mergers take place around the world the brand-
name and visual identity. HBOS and Royal Bank of ing dilemma becomes more acute, though, and the analysis
Scotland have a pluralistic style, with several different to pick the brand that produces the strongest customer reac-
31.12.05)
24,522
14,722
14,853
25,156
18,675
16,944
39,304
26,296
25,978
N.A.
10,601
25,495
N.A.
22,728
27,972
11,148
N.A.
14,609
64,898
11,344
16,367
11,582
18,916
20,929
25,286
13,428
14,864
16,051
14,116
12,872
15,643
9,509
37,662
16,593
24,953
22,472
13,504
14,053
12,254
17,037
11,105
8,601
12,548
13,015
9,605
31,109
7,854
31,789
15,434
17,119
Market
brands existing side by side. tion and highest economic result becomes more critical.
($m
cap
While several brands are shown separately in the list, if A more measured understanding of banking brand
the brand portfolios were to be added cumulatively the valuations will help to avoid some of the brand blunders
so-called consolidated listing would change in the follow- of the past and help to create a platform for new focused
TB
Brand
2,396
2,365
2,185
2,172
2,116
2,105
2,090
2,031
2,029
2,017
1,991
1,925
1,859
1,784
1,727
1,716
1,713
1,693
1,657
1,652
1,617
1,573
1,570
1,426
1,424
1,419
1,371
1,349
1,337
1,335
1,335
1,333
1,305
1,278
1,244
1,225
1,126
1,110
835
745
737
736
670
663
624
571
550
536
498
392
ing way. The portfolio brand value of JPMorgan + Chase growth in the future.
2005
value
($m)
BRANDING METHODOLOGY
domicile
Country
MY
AU
AU
RU
HK
CA
CA
DK
CA
US
BR
BR
US
US
US
US
US
US
US
SG
US
SG
US
SG
US
KR
KR
KR
SA
DE
SA
SA
BE
BE
ES
AT
SE
SE
TR
of
IN
IN
JP
JP
JP
JP
IE
IE
IT
IT
IT
THE METHODOLOGY through a margin analysis of
Brand ratings definitions
employed by Brand Finance in comparable companies. Finally,
this Top 100 Brands listing Rating Definition a competitive benchmarking
Banca Antonveneta
Deutsche Postbank
BB&T Corporation
Bank of Montreal
A Strong
Regions Financial
Malayan Banking
estimated future royalties, at position of the bank’s brand
Al-Rajhi Banking
United Overseas
Charles Schwab
St George Bank
Banco do Brasil
Bank of Ireland
Suntrust Banks
Woori Finance
Kookmin Bank
Shinhan Bank
Nikko Cordial
Monte Paschi
an appropriate discount rate, BBB Average along the royalty rate range.
Danske Bank
Shinsei Bank
Bear Stearns
Rank Companies
Scotiabank
Banco Itaú
M&T Bank
Macquarie
Sberbank
BB Under-performing
Capitalia
to arrive at a net present
Nomura
Keycorp
Citizens
Samba
Isbank
Abbey
OCBC
Dexia
B Weak
ICICI
value: the value of the ßrandßeta®
KBC
DBS
SEB
Note: The ratings from AA to B can be altered by including a plus (+) or minus
trademark and associated ßrandßeta® analysis is a
100
(-) sign to show their more detailed positioning in comparison with the
52
53
54
55
56
57
58
59
60
62
63
64
65
66
67
68
69
72
73
74
75
76
77
78
79
80
82
83
84
85
86
87
88
89
90
92
93
94
95
96
97
98
99
51
61
70
81
91
71
intellectual property (brand benchmarking study of the
general rating group
value). The basic steps are strength, risk and future
Source: Brand Finance, Bloomberg, www.brandfinance.com
outlined below. potential of a brand relative to
1. Obtain brand-specific its competitor set. It is
AAA-
AAA-
AAA-
rating
Brand
financial and revenue data Determine royalty rate on the basis of mostly publicly conceptually similar to a credit
AA+
AAA
●
BBB
BBB
BBB
BBB
AA-
AA-
AA-
AA-
AA-
AA-
A+
A+
A+
A+
A+
A+
A+
A+
AA
AA
AA
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A
A
A
A
A
A
B
2. Model the market (to range available financial information. rating, which companies are
identify market demand and 4. Calculate future royalty This is an economic use awarded based on their
Brand value/
the position of individual income stream approach that determines the strength, risk and future
cap (%)
market
14.3%
18.4%
17.0%
28.3%
N.A.
14.6%
13.6%
18.1%
17.9%
N.A.
18.6%
18.9%
11.5%
14.2%
14.6%
14.7%
15.4%
14.7%
12.5%
N.A.
N.A.
6.4%
12.3%
N.A.
22.0%
N.A.
13.9%
N.A.
N.A.
12.7%
8.7%
13.7%
7.1%
2.7%
4.7%
N.A.
8.6%
16.0%
N.A.
N.A.
N.A.
6.3%
8.6%
16.9%
9.0%
9.6%
7.1%
12.1%
7.1%
8.8%
brands in the context of all 5. Calculate discount rate value of the brand in relation to earning potential.
other market competitors). specific to each bank the royalty rate that would be It serves the following
Brand Finance has used incorporating size, payable for its use were it purposes:
three forecast periods international presence, owned by a third party. The ● It quantifies the strength and
31.12.05)
● An initial two-year period reputation, gearing and royalty rate is applied to future performance of the brand
245,512
181,703
185,342
63,897
N.A.
103,522
105,067
67,796
67,955
N.A.
61,851
49,919
82,116
62,241
60,012
59,263
53,605
53,300
60,507
N.A.
N.A.
95,242
47,147
N.A.
25,877
N.A.
37,959
N.A.
N.A.
34,785
50,561
29,295
54,290
135,769
77,387
N.A.
40,412
20,223
N.A.
N.A.
N.A.
45,131
32,172
16,177
30,559
28,086
37,485
21,956
36,184
28,004
Market
($m
cap
using Institutional Brokers ßrandßeta® (see below) revenue to determine an being valued.
Estimate System (IBES) 6. Discount future royalty earnings stream that is ● It provides an indication of
consensus forecasts stream (explicit forecast and attributable to the brand. The the risk attached to future
● A subsequent three-year perpetuity periods) to a net brand earnings stream is then earnings of the brand, and can
Brand
35,148
33,495
31,426
18,109
17,063
15,137
14,277
12,278
12,182
12,083
11,519
9,434
9,430
8,835
8,732
8,712
8,240
7,856
7,553
6,383
6,169
6,090
5,820
5,705
5,701
5,354
5,274
4,997
4,918
4,424
4,397
4,018
3,835
3,656
3,612
3,552
3,482
3,243
3,178
3,176
2,995
2,845
2,776
2,739
2,738
2,699
2,663
2,649
2,565
2,475
2005
value
($m)
forecast period based on an present value = brand value discounted back to a net be used in the determination of
average of available IBES present value. an appropriate discount rate for
domicile
Country
GDP growth expectations The Brand Finance model uses appropriate royalty rate using a ● It provides a basis for value-
SW
AU
AU
AU
AU
GB
GB
GB
GB
GB
GB
GB
GB
CA
CA
CA
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
BR
NL
DE
NL
DE
DE
ZA
BE
FR
FR
FR
ES
ES
SE
of
JP
JP
JP
IT
IT
weighted by geographic split a ‘relief from royalty’ variety of means. Initially, a based brand tracking.
expectations weighted by by the tax authorities and the range of royalty rates for the taken from Bloomberg, annual
Toronto-Dominion Bank
National Australia Bank
Royal Bank of Scotland
Standard Chartered
Wells Fargo & Co
American Express
Sumitomo Mitsui
Bank of Scotland
Mizuho Financial
Société Générale
Bank of America
Hypovereinsbank
Morgan Stanley
3. Establish the royalty rate for brand values by reference to between consumer banking, investor relations materials. The
Goldman Sachs
Wachovia Corp
Credit Agricole
Deutsche Bank
Commerzbank
Merrill Lynch
Lehman Bros
Credit Suisse
Banca Intesa
Freddie Mac
BNP Paribas
ABN AMRO
Capital One
US Bancorp
Rank Companies
each brand: documented, third-party business banking, investment qualitative data was compiled
Lloyds TSB
JPMorgan
UniCredit
Bradesco
NatWest
Westpac
Barclays
Nordea
Halifax
● Calculate brand strength transactions; and second, banking and credit cards. The by the Brand Finance
Chase
Fortis
BBVA
HSBC
ANZ
UBS
ING
Citi
12
13
14
15
16
17
18
19
20
22
23
24
25
26
27
28
29
30
32
33
34
35
36
37
38
39
40
42
43
44
45
46
47
48
49
50
10
21
31
41
11
1
2
3
4
5
6
7
8
9
rating
Brand
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
AA-
AA-
AA-
AA-
AA-
A+
A+
A+
A+
AA
BB
BB
BB
BB
BB
BB
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
architecture, which Brand Finance divides into three cat- Grupo Santander in fourth place. Royal Bank of
A
B
B
egories: monolithic, endorsed and pluralistic. The mono- Scotland + NatWest combined would reach 12th place.
Brand value/
lithic approach, as typified by HSBC, Barclays and Which approach is best? All three have their advocates
cap (%)
market
9.8%
16.1%
14.7%
8.6%
11.3%
12.4%
5.3%
7.7%
7.8%
N.A.
18.8%
7.5%
N.A.
7.8%
6.2%
15.4%
N.A.
11.6%
2.6%
14.6%
9.9%
13.6%
8.3%
6.8%
5.6%
10.6%
9.2%
8.4%
9.5%
10.4%
8.5%
14.0%
3.5%
7.7%
5.0%
5.4%
8.3%
7.9%
6.8%
4.4%
6.6%
8.6%
5.3%
5.1%
6.5%
1.8%
7.0%
1.7%
3.2%
2.3%
Fortis, with one name and one visual identity, contrasts but there is no definitive winner, except that the top five in
with the endorsed style of ABN AMRO and Santander, the list are either monolithic or endorsed. As more and
which use several different brands endorsed with a group more bank mergers take place around the world the brand-
name and visual identity. HBOS and Royal Bank of ing dilemma becomes more acute, though, and the analysis
Scotland have a pluralistic style, with several different to pick the brand that produces the strongest customer reac-
31.12.05)
24,522
14,722
14,853
25,156
18,675
16,944
39,304
26,296
25,978
N.A.
10,601
25,495
N.A.
22,728
27,972
11,148
N.A.
14,609
64,898
11,344
16,367
11,582
18,916
20,929
25,286
13,428
14,864
16,051
14,116
12,872
15,643
9,509
37,662
16,593
24,953
22,472
13,504
14,053
12,254
17,037
11,105
8,601
12,548
13,015
9,605
31,109
7,854
31,789
15,434
17,119
Market
brands existing side by side. tion and highest economic result becomes more critical.
($m
cap
While several brands are shown separately in the list, if A more measured understanding of banking brand
the brand portfolios were to be added cumulatively the valuations will help to avoid some of the brand blunders
so-called consolidated listing would change in the follow- of the past and help to create a platform for new focused
TB
Brand
2,396
2,365
2,185
2,172
2,116
2,105
2,090
2,031
2,029
2,017
1,991
1,925
1,859
1,784
1,727
1,716
1,713
1,693
1,657
1,652
1,617
1,573
1,570
1,426
1,424
1,419
1,371
1,349
1,337
1,335
1,335
1,333
1,305
1,278
1,244
1,225
1,126
1,110
835
745
737
736
670
663
624
571
550
536
498
392
ing way. The portfolio brand value of JPMorgan + Chase growth in the future.
2005
value
($m)
BRANDING METHODOLOGY
domicile
Country
MY
AU
AU
RU
HK
CA
CA
DK
CA
US
BR
BR
US
US
US
US
US
US
US
SG
US
SG
US
SG
US
KR
KR
KR
SA
DE
SA
SA
BE
BE
ES
AT
SE
SE
TR
of
IN
IN
JP
JP
JP
JP
IE
IE
IT
IT
IT
THE METHODOLOGY through a margin analysis of
Brand ratings definitions
employed by Brand Finance in comparable companies. Finally,
this Top 100 Brands listing Rating Definition a competitive benchmarking
Banca Antonveneta
Deutsche Postbank
BB&T Corporation
Bank of Montreal
A Strong
Regions Financial
Malayan Banking
estimated future royalties, at position of the bank’s brand
Al-Rajhi Banking
United Overseas
Charles Schwab
St George Bank
Banco do Brasil
Bank of Ireland
Suntrust Banks
Woori Finance
Kookmin Bank
Shinhan Bank
Nikko Cordial
Monte Paschi
an appropriate discount rate, BBB Average along the royalty rate range.
Danske Bank
Shinsei Bank
Bear Stearns
Rank Companies
Scotiabank
Banco Itaú
M&T Bank
Macquarie
Sberbank
BB Under-performing
Capitalia
to arrive at a net present
Nomura
Keycorp
Citizens
Samba
Isbank
Abbey
OCBC
Dexia
B Weak
ICICI
value: the value of the ßrandßeta®
KBC
DBS
SEB
Note: The ratings from AA to B can be altered by including a plus (+) or minus
trademark and associated ßrandßeta® analysis is a
100
(-) sign to show their more detailed positioning in comparison with the
52
53
54
55
56
57
58
59
60
62
63
64
65
66
67
68
69
72
73
74
75
76
77
78
79
80
82
83
84
85
86
87
88
89
90
92
93
94
95
96
97
98
99
51
61
70
81
91
71
intellectual property (brand benchmarking study of the
general rating group
value). The basic steps are strength, risk and future
Source: Brand Finance, Bloomberg, www.brandfinance.com
outlined below. potential of a brand relative to
1. Obtain brand-specific its competitor set. It is
AAA-
AAA-
AAA-
rating
Brand
financial and revenue data Determine royalty rate on the basis of mostly publicly conceptually similar to a credit
AA+
AAA
●
BBB
BBB
BBB
BBB
AA-
AA-
AA-
AA-
AA-
AA-
A+
A+
A+
A+
A+
A+
A+
A+
AA
AA
AA
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A-
A
A
A
A
A
A
B
2. Model the market (to range available financial information. rating, which companies are
identify market demand and 4. Calculate future royalty This is an economic use awarded based on their
Brand value/
the position of individual income stream approach that determines the strength, risk and future
cap (%)
market
14.3%
18.4%
17.0%
28.3%
N.A.
14.6%
13.6%
18.1%
17.9%
N.A.
18.6%
18.9%
11.5%
14.2%
14.6%
14.7%
15.4%
14.7%
12.5%
N.A.
N.A.
6.4%
12.3%
N.A.
22.0%
N.A.
13.9%
N.A.
N.A.
12.7%
8.7%
13.7%
7.1%
2.7%
4.7%
N.A.
8.6%
16.0%
N.A.
N.A.
N.A.
6.3%
8.6%
16.9%
9.0%
9.6%
7.1%
12.1%
7.1%
8.8%
brands in the context of all 5. Calculate discount rate value of the brand in relation to earning potential.
other market competitors). specific to each bank the royalty rate that would be It serves the following
Brand Finance has used incorporating size, payable for its use were it purposes:
three forecast periods international presence, owned by a third party. The ● It quantifies the strength and
31.12.05)
● An initial two-year period reputation, gearing and royalty rate is applied to future performance of the brand
245,512
181,703
185,342
63,897
N.A.
103,522
105,067
67,796
67,955
N.A.
61,851
49,919
82,116
62,241
60,012
59,263
53,605
53,300
60,507
N.A.
N.A.
95,242
47,147
N.A.
25,877
N.A.
37,959
N.A.
N.A.
34,785
50,561
29,295
54,290
135,769
77,387
N.A.
40,412
20,223
N.A.
N.A.
N.A.
45,131
32,172
16,177
30,559
28,086
37,485
21,956
36,184
28,004
Market
($m
cap
using Institutional Brokers ßrandßeta® (see below) revenue to determine an being valued.
Estimate System (IBES) 6. Discount future royalty earnings stream that is ● It provides an indication of
consensus forecasts stream (explicit forecast and attributable to the brand. The the risk attached to future
● A subsequent three-year perpetuity periods) to a net brand earnings stream is then earnings of the brand, and can
Brand
35,148
33,495
31,426
18,109
17,063
15,137
14,277
12,278
12,182
12,083
11,519
9,434
9,430
8,835
8,732
8,712
8,240
7,856
7,553
6,383
6,169
6,090
5,820
5,705
5,701
5,354
5,274
4,997
4,918
4,424
4,397
4,018
3,835
3,656
3,612
3,552
3,482
3,243
3,178
3,176
2,995
2,845
2,776
2,739
2,738
2,699
2,663
2,649
2,565
2,475
2005
value
($m)
forecast period based on an present value = brand value discounted back to a net be used in the determination of
average of available IBES present value. an appropriate discount rate for
domicile
Country
GDP growth expectations The Brand Finance model uses appropriate royalty rate using a ● It provides a basis for value-
SW
AU
AU
AU
AU
GB
GB
GB
GB
GB
GB
GB
GB
CA
CA
CA
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
BR
NL
DE
NL
DE
DE
ZA
BE
FR
FR
FR
ES
ES
SE
of
JP
JP
JP
IT
IT
weighted by geographic split a ‘relief from royalty’ variety of means. Initially, a based brand tracking.
expectations weighted by by the tax authorities and the range of royalty rates for the taken from Bloomberg, annual
Toronto-Dominion Bank
National Australia Bank
Royal Bank of Scotland
Standard Chartered
Wells Fargo & Co
American Express
Sumitomo Mitsui
Bank of Scotland
Mizuho Financial
Société Générale
Bank of America
Hypovereinsbank
Morgan Stanley
3. Establish the royalty rate for brand values by reference to between consumer banking, investor relations materials. The
Goldman Sachs
Wachovia Corp
Credit Agricole
Deutsche Bank
Commerzbank
Merrill Lynch
Lehman Bros
Credit Suisse
Banca Intesa
Freddie Mac
BNP Paribas
ABN AMRO
Capital One
US Bancorp
Rank Companies
each brand: documented, third-party business banking, investment qualitative data was compiled
Lloyds TSB
JPMorgan
UniCredit
Bradesco
NatWest
Westpac
Barclays
Nordea
Halifax
● Calculate brand strength transactions; and second, banking and credit cards. The by the Brand Finance
Chase
Fortis
BBVA
HSBC
ANZ
UBS
ING
Citi
12
13
14
15
16
17
18
19
20
22
23
24
25
26
27
28
29
30
32
33
34
35
36
37
38
39
40
42
43
44
45
46
47
48
49
50
10
21
31
41
11
1
2
3
4
5
6
7
8
9