Money talks
Tuesday, 08 September 2009 10:41

It’s been 18 months since the credit crunch cast its shadow over the financial sector. Some revered institutions went to the wall, others battened down the hatches and others still communicated with ham-fisted misguidedness. But some protected or even enhanced their reputations through clear, consistent comms strategies: as Jon Barker found out

The credit crunch has been a rocky ride for corporate communicators. But you know that – bearish articles reporting corporate ineptitude are ten a penny.

Look carefully, though, and you’ll see the odd glint of excellence amid the gloom. At Communicate, we wanted to sniff out the financial institutions that succeeded, that steadied the ship by communicating well. We asked the top UK media communication and PR agencies to pick their leading examples of stakeholder relations in the financial services sector.

Here are the top five financial stalwarts, as chosen by those in the know.

 


 

HSBC
Of the big banks, Santander received favourable comment from those we spoke to: the Spanish brand’s response to the gathering clouds of economic woe was to absorb household British institutions, while stealthily encroaching on market share of the UK high street, and that was something of a PR coup. Many more put forward the case of Barclays: its fighting talk and stubborn refusal to accept bail-out money appealed to the plucky teenager in many nominating PRs. Some even plumped for RBS: while HBOS and Lloyds remained silent in the face of dreadful results, RBS chief executive Stephen Hester spoke out with eloquence, honesty and clarity.

In the end, however, HSBC won the most plaudits. PRs felt it had consistently been a leading light amid the doom and gloom of the financial sector.

Of course, no bank is without its detractors. But where Barclays’ methods were questioned by some, HSBC was seen to herald a more cooperative quality when dealing with the Government and regulators. And while many focused on the business basics, HSBC capitalised on a customer’s need to rely on brands – and the flight to quality.

‘The world’s local bank’ has an enviable brand reputation and set of results that have seen it enjoy a stronger position than the majority of its competitors. Making no bones about its luxury overtones, it’s a brand that stands for something among its consumers and has a presence that resonates worldwide, particularly in Asia.

And where other banks have made the most of headline-grabbing M&A adventures, HSBC has been rather more softly spoken, preferring instead to tell good stories around a series of truths: a share price that has been more consistent than any other bank, for example.

This approach is also testament to persuasiveness of executive chairman, Stephen Green. His deliberate policymaking, while others such as RBS were hungry to make inroads into China, did not sit well with everyone. But although the purchase of US subprime lender Household – which has forced a £7 billion write-off in addition to a £17 billion provision against bad loans – dented his reputation, he never bet the bank on the risky exploits of others. By sticking religiously to his principles, Green – and HSBC - has emerged from the credit crunch in better shape than most.

Standard Chartered
Standard Chartered Bank’s successful role in the story of the credit crunch lies in its ability to stick to its business strategy and to quietly go about carrying t out.

Although based in London and listed on the London Stock Exchange, Standard Chartered makes 75% of its profits in Asia. As a result of its propitious focus on Asia, Africa, the Middle East, the bank has not been hit by the toxic assets of those who have placed the majority of their eggs in Western markets.

It’s also enjoyed an impressive set of results: in August it announced it was seeking up to £1bn in fresh capital to fund economic recovery in the Far East, and it recently went toe-to-toe with HSBC and Citigroup to win wealthy retail customers across Asia.

But while the bank has used its differentiated position in the market to impress the media, it has also een careful not to over egg it.

“There’s no doubt that good results equate to good press coverage,” says Tim Baxter, head of corporate communications at Standard Chartered. “But we’ve been very careful to strike a balance between telling a good story and coming across over-confident. Trust needs to be rebuilt in the financial sector, and the outlook for the industry as a whole is still uncertain.”

The bank’s commitment to CSR has also won it many plaudits, with a number of carefully communicated sustainability programmes: Standard Chartered is committed to educating one million people on HIV/AIDS by 2010. And its low-key approach to publicity, rather than chasing a media spotlight, is rooted in its belief of teamwork and core values: “We’ve built a robust management team around a sound business plan,” says Baxter. “We’re not interested in making media superstars.”

Yet this modest tone has been set from the top. Chief executive, Peter Sands, along with ex-chairman Mervyn Davies – who, since becoming Trade Minister for the Government in January 2009, has been instrumental in Gordon Brown’s efforts to help rescue Britain’s banking sector – has been the architect of a sound comms strategy.

“Peter is regarded in the industry for his intellect, which speaks for itself,” says Baxter. “But it’s important that we haven’t coveted greater media coverage than the size of the bank. Instead we’ve focused on the basics of banking and followed through our strategy, free from complacency or hubris.”

Man Group
The hedge fund industry wasn’t exactly enjoying the credit crunch either but the response of certain protagonists didn’t go unnoticed among the UK communication profession.

When the world’s largest listed hedge fund manager, Man Group, admitted it was exposed to the Bernard Madoff affair, things didn’t look good. Its link with Madoff was through its RMF fund of funds business, which had $360 million invested in funds directly or indirectly sub-advised by Madoff.

Enter a new global head of communications, Simon Anderson. His appointment was a true baptism of fire – he joined just two weeks before Lehman Bros went bankrupt. The credit crunch had put a lot of stress on Man Group’s business model, especially its fund of funds activities. Anderson’s role was to rapidly develop an issues management front, so investors in nderlying funds could quickly receive information about any exposure, and to communicate the robustness of the business model to shareholders.

Man Group dug-in and adopted a statesmanlike approach to reorganising its business. It merged its fund of funds assets and spoke out to the press and city analysts about its asset exposure. By the last quarter of 2008, it had emerged as one of the credit crunch survivors.

And it didn’t stop there. As the pressure of the financial crises subsided midway through 2009, Man Group shifted its focus: it highlighted what was happening in the market at that moment, based on front-line sales, in order to be more forward looking. CEO Peter Clarke was made readily available for press interviews outside the usual management and quarterly statements, while city analysts were courted via a series of teleconferences.

“Man’s approach in the financial crisis has been to step forward and proactively engage with the media,” says Anderson. “This has served us well, not only in positioning Man as a robust and financially strong business at the height of the crisis, but to also highlight the strong competitive advantage we have moving forward.”

Bank of England
A nomination that may raise the eyebrows of some – not least Mr Darling – the ‘Old Lady’ of Threadneedle Street has received support among the PR fraternity. They cite the Bank’s singularity and simplicity of messaging as being worthy of mention.

A spokesperson for the BOE says: “The Bank takes great care to deliver considered, clear and independent views on monetary policy and financial stability whatever the economic climate.”

When the BOE launched its ‘quantitative easing’ programme back in March, it was met with much media scepticism. However, banks rushed to sell the BOE government bonds, or gilts, in return for its cash.

And the rest of the world, it seemed, held its breath: from anxious leaders in Europe to the US Federal Reserve, everyone was waiting to take its lead, or not, from the Bank’s intervention. This called for confident communications: the BOE had taken the bear by its thorns and had to set out a blueprint for some kind of recovery. By July 2009, it was beginning to recognise success in the fact that, at the very least, any companies were finding credit markets easier to access.

Mark Knight, director at Broadgate, says: “The Bank of England has been a resolute and steadying force giving a clear impression that although these were stormy seas it was confident of steering the ship through to calmer waters. Several of my European clients praised them for their leadership, timely and bold actions while some central banks were still
deliberating over charts and calculators.”

Although some PRs conceded that Mervyn King, the governor of the Bank of England, is not always a natural media communicator, his carefully worded and diplomatic messaging has cut a dash among European thought leaders, while challenging the jargon-laden rhetoric of the British political establishment.

“Mervyn King is not always a natural in front of the cameras,” agrees Knight, “but in the last 12 months he has remained unbowed by government pressure to give an honest appraisal of where the country stands.”

Prudential
Prudential is in good shape. Tidjane Thiam will take over as chief executive from Mark Tucker in October and he inherits a healthy business. The decline in half-year operating profit was less than expected, while profit from new business sales has surged well above expectations. By concentrating on relations with investors and communicating this clearly through the media and internally, it has attracted plaudits.

The UK-based life assurer’s business strategy during the credit crunch has been to forsake market share in favour of looking after investors. Analysts have commended the Pru on its diversified strategy, which includes a rapidly expanding Asian arm and a focus on capital conservation and cash generation by concentrating on expanding sales in its most profitable product lines. It’s a tactic that has ensured it has had a good war in the last few months.

“Prudential’s approach to communication has been driven by a clearly defined business strategy,” explains Darragh Leeson, head of media relations at Prudential UK & Europe. “Our group financial strength, prudent management of capital resources, geographical spread, trusted brands and relentless focus on seizing profitable opportunities in the pre and post-retirement arket has continued to prove a successful formula.”

Clear communication has played an important part in its success – not least in explaining decisions to investors and staff.

“Prudential has worked hard to ensure our stakeholders understand our business strategy, as well as emphasising that insurers are not banks and that we have a totally different business model,” says Leeson. We have engaged with our stakeholders in a direct and precise way, working hard with all our audiences to help them understand what we are doing and why we are doing it.”