Key Points from the Top 20 Banking Brands List

The London-based world’s leading band valuation consultant, Brand Finance, published the Top 500 Global Banking Brands for 2009 last month. They have published this annual report since 2006 in partnership with The Banker magazine. The list is based on data from the world’s largest stock exchanges. Each brand is assigned a brand rating: "A benchmarking study of the strength, risk and future potential of a brand relative to its competitor set as well as a brand value and a summary measure of the financial strength of the brand”.

Brand Names - Why are they important?

According to Brand Finance:

“Brands are the most valuable intangible assets in business today. They drive demand, motivate staff,secure business partners and reassure financial markets. Leading edge organisations recognise the need to understand brand equity and brand value when making strategic decisions.”

The following table lists the Top 20 Global Banking Brands for 2009:

Rank	Bank	Ticker	Country	Brand Rating
1	HSBC	(HBC)	UK	AAA+
2	Bank of America	(BAC)	USA	AAA
3	Wells Fargo	(WFC)	USA	AA
4	Santander	(STD)	Spain	AA
5	ICBC	N/A	China	A+
6	Ameican Express	(AXP)	USA	AA
7	Citibank	(C)	USA	A
8	BNP Paribas	(BNPQY)	France	AA-
9	China Construction Bank	(CICHF)	China	AA
10	Chase	JPM	USA	A+
11	J.P. Morgan	(JPM)	USA	AA-
12	Banco Bradesco	(BBD)	Brazil	AA
13	Credit Suisse Group	(CS)	Switzerland	AA+
14	Barclays	(BCS)	UK	A-
15	UBS	(UBS)	Switzerland	AA-
16	Bank of China	BACHF	China	AA
17	Goldman Sachs	(GS)	USA	AAA-
18	Deutsche Bank	(DB)	Germany	AA-
19	BBVA	(BBV)	Spain	A+
20	Societe Generale	(SCGLY)	France	A-

Note: AAA = Extremely Strong, AA = Very Strong, A = Strong

Key points from this year’s report:

1.Chinese bank brands are becoming powerful; two of these brands are in the list above.

2. The brand value of developed market banks have fallen more than other banks. US and UK banks have lost 40% and 15% of their brand value respectively.

3. The total number of US banks in the top 500 list has dropped to 95 banks this year. Seven US banks are in the top 20 list. This is very interesting because since the credit crisis started here, many more banks have been shutdown by regulators than any other country.

4. HSBC received the highest ranking with a brand value estimate of $25.3 billion and the highest brand rating of AAA+. As the “World’s Local Bank”, HSBC provides customized high quality services in its retail division tailored to each region where it operates. After holding up relatively well compared to other British banks, HBC last week announced a cut in dividend payout by 29% for the year and a rights issue.

5.The only emerging markets bank in the top 20 is Banco Bradesco from Brazil other than the two Chinese banks.

6.Spanish bank Santander will become the 3rd largest private sector bank in Brazil after merging its operations with Banco Real.

7. Financial institutions such as American Express, Citibank and Bank of America still have high brand premiums though their market capitalisations have reduced significantly.

You can download the full report here.

Comments

[Mad Hedge F...:]

Looks like there is a massive short covering play setting up in the financial sector. There was big hedge fund buying of calls and call spreads in the Financials Select Sector SPDR ETF (XLF) at the end of last week. The healthy components of this basket, like JP Morgan (JPM) (12%), Goldman Sachs (GS) (7%), and Wells Fargo (WFC) (6%), are at record low valuations. The sick one like Citigroup (C) and Bank of America (BAC) are essentially at zero. This makes your downside risk very low. Watch this space.

Mar 09 11:54 AM