UBS And Barclays Are No Longer Top Global Brands Among Banks

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The popularity of the world’s biggest banks has been declining. And for those still in doubt, the list of the 100 best global brands for 2012 released by brand management firm Interbrand last week should be a proof. A quick glance at the annual list shows that the global banks are no longer at the top of the customers’ minds. [1]

The findings of the Interbrand survey come as no surprise with a string of scandals and unjustified losses reported by some of the world’s biggest banks, significantly eroding customer confidence. The list for this year features 7 global banks – down from 9 in 2011. It is clearly not a coincidence that the two banks missing from the list are UBS (NYSE:UBS) and Barclays (NYSE:BCS).

The largest Swiss bank has come under fire since it reported an unauthorized trading loss of more than $2 billion late last year while the largest British bank continues to draw rebuke for its role in manipulating the LIBOR.

See our full analysis for UBS | Barclays

A company’s brand is believed to capture the essence of its popularity among the masses. Hence, Interbrand’s list provides the means to compare various global brands in terms of popularity. The dollar brand value assigned to each brand also allows a comparison of brands across sectors. And from the looks of it, the banks as a group are doing worse than the others that form the list of top 100 brands.

Banks have been struggling with declining profits and huge legal backlogs since the economic downturn of 2008. But, things have been particularly bad over the recent quarters with unexpected lapses in their businesses, strengthening the case for stricter regulations. And a few incidents stand out prominently which would make customers think twice before opting for a particular bank’s services.

The table below summarizes the banks’ standing in the list of 100 best global brands:

Bank Ticker 2011 Rank 2012 Rank Major Concerns Over Recent Months
JPMorgan Chase JPM 28 32 Multi-Billion Dollar Hedging Strategy Loss
HSBC HBC 32 33 Impaired Profitability
Goldman Sachs GS 38 48 Government Pressure to Scale-Down Trading Ops
Citigroup C 42 50 Failed To Clear Fed Stress Test
Morgan Stanley MS 54 54 Exposure to Peripheral Debt
Banco Santander SAN 68 76 Capital Concerns From Weak Spanish Economy
Barclays BCS 79 - LIBOR-Manipulation Scandal
Credit Suisse CS 82 95 Impaired Profitability; Tax Evasion Charges
UBS UBS 92 - Unauthorized Trading Incident

Banks thrive on trust, and their fortunes are made or marred simply on the basis whether their customers trust them with their money or not. The following statement from Interbrand’s review of financial institutions as part of this survey sums up the state of affairs:

From a consumer point of view, trust is at an all-time low, and willingness to consider alternative providers at an all-time high.” [2]

The banks that are embroiled in scandals and legal battles over alleged wrongdoings seem to miss the larger impact of these actions on their businesses. While the one-time settlements they result in will only affect earnings for a single quarter, such incidents leave a dent in customer confidence which may take years to repair, if at all.

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Notes:
  1. 2012 Report, Interbrand []
  2. Rebuilding Trust in Troubling Times, Interbrand Website []
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