InterBrand: Few Gainers in Financial Services Industry
Quittner, Jeremy, American Banker
Retail financial services companies like American Express Co. and Citibank notched gains in one annual ranking of global brands, but headline-grabbing scandals at investment banking firms scuffed up a few white shoes.
All four of the investment banking firms tracked by New York's Interbrand Corp. suffered a loss in the value of their brands over the past year - and according to Interbrand calculations that translates to millions in lost sales.
Merrill Lynch & Co. and J.P. Morgan Chase & Co. took the biggest hits to their brand value. Also falling were Morgan Stanley and to a smaller extent Goldman Sachs & Co..
Some observers attributed the erosion to scandals that have rocked the big investment houses the past couple of years, as well as tough markets globally.
Interbrand, which published its latest ranking in July, tracks 150 global brands across all industries, including seven in the financial services category. To be selected, brands must derive at least 20% of sales from outside their home country and have publicly available financial data.
Interbrand assigns a dollar value to each brand, applying its own formula for calculating the brand's bottom-line impact. The company draws information from public documents, including annual reports, analyst reviews, media coverage and syndicated market research.
Generally speaking, it calculates revenue from products and services that carry the brand name, making a deduction for taxes and production costs. The formula also weighs factors such as stability and market leadership.
"These are top-line data that show how important the brand is in generating shareholder value," said Jan Lindemann, the global director of brand valuation for Interbrand in New York. "Brands create long-term values and tend to be more secure and safer investments than others, because they don't decline overnight."
Coca-Cola is the world's top brand, according to the Interbrand scorecard. It is worth $70 billion, up 1% from last year, Interbrand said.
Citibank, which is 13th on the worldwide list, is the top financial services brand and Amex, No. 15 worldwide, is No. 2 in its industry. They were also the only two financial services companies in the Interbrand ranking whose brand values grew between last year and this year - both by 3%, Citi's to $18.6 billion and Amex's to $16.8 billion.
The other five financial services firms on the list, in descending order, are: Morgan Stanley, Merrill Lynch, J.P. Morgan, HSBC Holdings PLC, and Goldman Sachs.
Interbrand separates investment and retail banks in its review. Hence it looked at Citibank but not its corporate parent Citigroup Inc., which includes the investment bank Smith Barney. Similarly, its assessment of J.P. Morgan excluded the Chase Manhattan retail bank.
Morgan Stanley's brand value fell 5%, to $10.7 billion. Both Merrill Lynch and J.P. Morgan dropped 6%, to $10. …