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March 19, 2009updated 04 Apr 2017 3:56pm

HSBC’s breakaway brand

HSBC has launched an ambitious re-branding exercise, taking advantage of its global scale to put clear water between itself and rivals

By John Evans

HSBC has launched an ambitious re-branding exercise, taking advantage of its global scale to put clear water between itself and rivals. The initiative also aims to rebuild revenue streams after the great dash for cash among clients. John Evans reports on the project.

HSBC could become a breakaway brand in private banking, gaining a major competitive advantage over weakened institutions like UBS, Citigroup and Merrill Lynch/Bank of America following an estimated $10 million rebrand.

While HSBC’s Private Bank does not yet have the critical mass of its global private banking rivals, it has benefited from its parent’s conservative business model and has not been affected by the wholesale client outflows suffered by some of its global counterparts.

As of the end of 2008, HSBC ranked as the sixth-largest wealth manager defined by client assets under management, with a total of $352 billion – a credible performance given its private banking arm only dates back to 2000. It was set up after the integration of the Republic offshore banks and some private banking operations within the HSBC group in the UK and Asia.

Now, HSBC is re-branding its global private bank, at a cost estimated at $10 million. A mandate has been given to advertising group WPP to bring the private bank’s positioning closer to the core values of HSBC group while retaining the “specialness” of private banking, according to HSBC officials.

Important differentiator

A recent PricewaterhouseCoopers global private banking survey showed that 93 percent of responding business managers said a clear, high-profile brand is the “most important differentiator” for their firm and of crucial importance in attracting new clients.

Despite that, few private banks have tried to use high-profile advertising and brand-building campaigns to gain a competitive edge. And where they do, the success has been limited, experts say.

Many of the rich are new to their wealth and just do not know where “trustworthy professional advice can be found,” says John Clemens, managing partner at consultancy Tulip Financial. A recent survey shows that most wealth investors still don’t use advisory firms despite the ravages the crisis is causing to their personal assets (see UK super-rich ‘apathetic’ amid collapse).

This should be “a call for more proactive marketing from professional wealth advisers seeking additional business,” Clemens says, adding the wealth business can no longer rely on client referrals as a major source of new customers.

Richard Williams at wealth consultancy MDRC even goes as far to say that the current marketing of private banking is a barrier to wider usage among clients.

“The brand image projected by many private banks and wealth managers does not readily appeal to the ‘core’ HNW individual,” Williams says.

The image projected by private banks and wealth managers should, he adds, “be focused more closely on the aspirations of the target market”.

At HSBC, it is stressed that the branding exercise comes amid wider concerns in private banking generally over rebuilding income streams as well as client trust, as the credit crisis and economic downturn takes hold.

Chris Meares, chief executive of HSBC private banking, says the wealth industry is “challenged” by the inevitable tendency of clients to sit on cash because of the credit crisis.

“When asset values and trading volumes go down, fees go down. Margins are less, so we have to cut costs or grow the business somehow,” he declares.

Meantime, the strength of the HSBC global franchise is demonstrated by research from marketing consultancy Brand Finance, showing the British-based bank has retained its number one position among global financial brands for 2009.

While its notional brand value fell 40 percent to $25.4 billion amid the general attrition in financial services, HSBC still benefited from being a global brand with a AAA+ brand rating, a compilation of the top 500 marques in finance by the consultancy showed.

The geographic split of HSBC, which portrays itself as the ‘World’s Local Bank’ has buffered its exposure to the credit crisis, spreading risk both globally and across all revenue streams, the consultancy said.

In contrast, UBS, the biggest global private bank, fell to 15th place from 12th last year, in the wake of huge losses and write-downs of nearly $50 billion of impaired assets, the ranking showed. Merrill Lynch, now part of Bank of America, plunged to 63rd in the ranking, down from 30th.

Citigroup, which is putting much of its wealth management capacity including Smith Barney into a joint venture with Morgan Stanley, saw its brand value fall to seventh from second the previous year, with brand worth slashed to $9.8 billion.

Among British banks, Royal Bank of Scotland fell to 42nd from 26th where its brand is valued at $2.5 billion. Barclays now stands at 14th from 11th the prior year, with a brand value of $7.5 billion. Among Swiss players, Credit Suisse fell to 13th from 10th, with brand value cut to $7.7 billion.

Among pure play private banks, Julius Baer retreated to 143rd from 122nd, where its brand worth is estimated at $665 million. EFG International was down to 251st from 221st, with a worth of $242 million.

Overall, the top 500 bank brands fell 32 percent in value to a total $218 billion, though this was less than the drop in their aggregate market capitalisation of 51 percent to $3.9 trillion in 2008.

BRANDING

Global finance – 2009 rankings

Rank

Brand

Brand value 2009 ($bn)

1

HSBC

25.4

2

Bank of America

21

3

Wells Fargo

14.5

4

Santander

10.8

5

ICBC

10

6

American Express

9.9

7

Citi

9.8

8

BNP Paribas

9.4

9

China Construction Bank

9

10

Chase

8.7

Others

13

Credit Suisse

7.7

15

UBS

7.6

143

Julius Baer

0.7

251

EFG International

0.2

Source: Brand Finance

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