Bank brands still suffer from fall out of Lehman collapse
A year after the collapse of Lehman Brothers, many banks are not only suffering from the financial after shocks that resulted from the failure of the 185-year-old bank, they are still shackled with negative brand perception.
The failure of Lehman caused convulsions in financial markets worldwide and led to some of the UK’s biggest financial institutions in desperate need of life-support.
By the end of September, a combination of hubris, bad deals and a tangled web of exposure to Lehman’s liabilities combined to send HBOS to the brink of collapse before Lloyds were cleared to save the day and Lloyds Banking Group was formed.
Meanwhile, in October Royal Bank of Scotland received its first injection of taxpayer money.
Unsurprisingly, it is these two that have seen their BrandIndex “Buzz”, YouGov’s measure of whether people have heard negative or positive things about a brand, move most steeply southwards in the wake of last Autumn’s crises, with perception of both mired in the red ever since.
In the two weeks after the Government bypassed the usual competition concerns and allowed Lloyds to snap up HBOS on 18 September, Lloyds TSB’s rating was buoyed by its status as white knight (on a black horse), rising from 1 to 5 on the 6 October.
However, from 13 October when the scale of HBOS’ woes were first revealed and the new Lloyds Banking Group was forced to ask for Treasury assistance, its Buzz fell sharply to -31 on the 17th.
Similarly troubled RBS also saw perception plummet in the days after the Government took a near 70% stake in the bank in mid-October, falling from an already negative -35 amid news of its imminent demise, to a rock-bottom -54 days after the 13 October bailout.
Neither Lloyds nor RBS have fully recovered since as news of job cuts at the former and the controversy over the latter’s lavish, and for some inappropriate corporate hospitality at this year’s Wimbledon tournament.
To deal with this negative, the two have steered different paths in terms of marketing strategy.
Lloyds Banking Group brands Lloyds TSB and Halifax have continued to launch regular product-based marketing communications, while quickly restructuring the senior marketing team for the enlarged group. It has also recently consolidated its media planning and buying business under Mediaedge:CIA and moved ahead with its top-tier sponsorship of the London 2012 Olympics.
RBS has, in contrast, announced plans to drop its sponsorship of F1 team Williams at the end of the current season, although it has extended its sponsorship of the Six Nations international rugby tournament.
It has also launched a corporate communications campaign that aimed to highlight its lending to small businesses and also recently hired brand strategy consultancy Lippincott with a brief to help restore trust in its brands.
For those that were less scarred by last year’s fallout, brand perception has held up.
The winners appear to be Nationwide Building Society, which has been running campaigns highlighting the safety, and security it offers depositors and HSBC, who were relatively untangled in the complex web of esoteric financial instruments and forged ahead with its “the word’s local bank” positioning.
Nationwide’s Buzz as remained in the black over the last six months, while perception of HSBC has remained mainly positive in the past year.
In the year after the shocks of last autumn, a slew of reports have suggested that perception and trust in banks was at rock-bottom, with many observers believing it provided opportunity for trusted brands from the retail sector and beyond to move in and plug the trust gap.
That is no doubt true in the case of those financial institutions most associated with the excesses prevalent in some quarters of the City until last September. However, the positive perception of those banks less affected by the collapse of Lehman suggests it could be the actions of some voracious bankers and not banks per se that consumers look upon with suspicion.
