HSBC global marketing chief Peter Stringham, who has helped transform the business from a disparate collection of financial institutions into one of the world’s most coherent and powerful banking brands, is rejoining Young & Rubicam as chief of Y&R Brands. Yet despite announcing four months ago that Stringham was leaving, there is still no word from HSBC on a replacement, nor any indication of what will happen to the marketing department.
It emerged last week – just days after the "world’s local bank" announced its first profit warning in 150 years – that Stringham is returning to Y&R, the WPP-owned marketing services business where he worked before taking up the top HSBC marketing job in 2001. Back then, he headed Y&R’s ad agency in North America. This time, he becomes chief of Y&R Brands, a network of advertising, direct marketing and branding companies.
His exit from the HSBC post of group general manager of marketing was announced last October (MW October 26, 2006) with a departure date set for March 2007. It is thought Stringham’s departure has been caused by a change at the very top of the company. Chairman Sir John Bond, who hired Stringham and was behind the strategy to rebrand the bank’s subsidiaries as HSBC, left last May at the age of 65 to become the chairman of Vodafone.
Was he pushed?
One source has suggested that the new management team, consisting of chief executive Michael Geoghegan and chairman Stephen Green – previously the chief executive – no longer backed Stringham’s position. As Stringham himself once told Marketing Week: "I was impressed that here was a chairman (Bond) who was determined to improve the marketing of the organisation. If you don’t have the support of the chief executive and chairman, being a global marketing director is a hopeless game."
The future direction of HSBC’s marketing will have significant repercussions for worldwide branding as the bank has pioneered a radical centralising approach to globalisation. Other globalisers will be watching closely to see how the company evolves its advertising strategy and promotes its unified business as it seeks to create the world’s first truly global financial services brand.
Officially, an HSBC spokesman says of Stringham’s exit: "He left because of a personal decision. We wish him every success. We are still in the process of looking for a successor and hope to bring it to a resolution as soon as possible."
Observers claim that there is talk within the bank of replacing him with a board-level marketing director, which would mean a significant upweighting of the role. One source says: "Geoghegan is very hard nosed, not from the more gentlemanly, old school of banking. He is just a different type of personality from Stringham, who has decided it wouldn’t have been a good idea to hang around. Green is the former chief executive and is now chairman – he is more from the old school of banking, he is a lay priest. He’s a bridge between the different world’s of Geoghegan and John Bond."
Stringham’s job has been to oversee the creation of centralised marketing communications and persuade marketers in different countries to use them alongside their own product work. Under an elevated marketing director’s role, the new holder of the job may be given the power to impose his or her will and command local markets to adopt the centralised strategy.
Whoever takes over the top marketing job will be thrust into a complex agency relationship. HSBC’s global approach led to a groundbreaking agency deal carried out at holding company level. In 2004, Stringham appointed WPP to service the £350m global account. WPP’s Team HSBC uses thousands of personnel from across the business, handling creative advertising, media, direct marketing and branding. There have been rumours of dissatisfaction within HSBC at the relationship. The advertising veered away from the original executions showing cultural collisions to the "What’s your point of view?" campaign, directing people to a website for further discussion about their issues. But few believe the bank is likely to unpick the WPP deal because it has too much else on its plate at present. "Where else could they go?" wonders one observer.
It is thought that while a replacement marketer is chosen, Roberta Arena, director of e-business, will caretake the marketing department. Given the huge possible size of the new role, neither she nor former Saatchi & Saatchi ad man Chris Clark, now planning chief for HSBC, are considered to be in line to take up the job. In fact, there could be difficulties in finding someone of sufficient seniority to fill the role.
After all, no other business is quite comparable to HSBC, the number two worldwide bank. Formed from the fusion of various acquisitions, including the UK’s Midland Bank in 1992, HSBC launched its drive to create an over-arching brand in 1998. Today, it is used in nearly 10,000 branches in 76 countries and territories around the world. It has some 125 million customers it has become a byword for the ambitions of imposing a global strategy across diverse markets.
One global brand
The drive to single branding has caught on. Earlier this month, the world’s biggest bank Citibank, with 5,000 branches in 100 countries and 200 million accounts, announced that it too was creating a unified logo. However, Citibank will maintain powerful local brands where appropriate, such as Egg in the UK and interests in Mexico and Poland.
Whoever lands the HSBC marketing job will face the classic dilemma of globalisation: balancing the needs of the centre with the requirements of local markets. Many see the "world’s local bank" line as being a clever attempt to square the circle. However, its use has been controversial. HSBC adopted the line, created by its ad agency Lowe, in 2000. But Lowe’s client Interbrew was already using a similar tagline, calling itself "the world’s local brewer". The beer company unsuccessfully sued the bank for infringing its copyright.
However, the claim that HSBC offers the might of worldwide coverage while at the same time having an in-depth understanding of local conditions has been dealt a serious blow by its recent experience in the US.
Its controversial acquisition of US mortgage provider Household in 2003 was unpopular with shareholders, who saw it as a departure from HSBC’s strategy of investing in growth markets in the developing world. Household, by contrast, concentrates on providing mortgages to low-income borrowers. But after 17 rises in interest rates, the US housing market has become tough and many of these poorer borrowers have started to default on their debts, just as the equity on their properties falls in value. The caution of shareholders turned out to be correct. The Household crisis led to HSBC’s profits warning earlier this month.
According to Jane Strawbridge, banking analyst at Williams de Broe, HSBC shares have underperformed the market since the Household deal. But she is hopeful that the new management team will be able to restore HSBC to its former glory. She thinks Bond decided to go of his own volition, rather than being made to pay the price for the unpopular Household acquisition.
"At 65, I think it might have been his own decision that they needed a new, younger team there to turn this great company around, that they needed some new blood to get it all on track. I’m hopeful they will: HSBC has got strength in diversity," she says.
Stringham told Marketing Week that a centralised "command and control" structure would be unsuitable for the diverse needs of HSBC. But under the new management, his consensual, persuasive approach may be replaced by something far more commanding. The pendulum at HSBC under Geoghegan appears to be swinging away from localised power towards greater central control.