cover story cover story

The valuation of brands in

banking helps to create new
frontiers in outsourcing
and franchising

marketing head and Nike advertising director, states in his
recent book: “I can think of no better organising princi-
ple for a company than the brand itself.” A well-managed
brand is seen to mobilise all of a company’s stakeholders
(employees, customers, investors, etc) to create value.
Not just a name
A brand is much more than the name above the door. It
is now acknowledged to be responsible for driving cus-
tomer acquisition, reducing customer churn rates and
staff turnover, thereby increasing profitability and help-
ing to influence analysts’ and investors’ perceptions. This
month, The Banker has joined with leading UK-based
independent brand valuation firm Brand Finance to pub-
lish the first publicly available table analysing the finan-
cial value of the world’s top 100 brands.
For the first time, the top 100 most valuable brands list-
ing provides not only detailed valuations of intangibles
using a transparent methodology (‘royalty relief ’) that has
been deemed ‘fit for use’ by tax and law courts around the
world, but also offers institutions the opportunity to cre-
ate new models to manage their intellectual property (IP)
needs better.
Brand Finance’s CEO, David Haigh, believes the
greater focus on marketing intangibles, the impact of
IFRS3 accounting standards and their effect on mergers
and acquisitions planning and integration, are leading
banks to establish separate IP companies. These brand-
holding companies provide brand control, help with tax
issues and planning for acquisitions. Although there are
few such companies at present, Mr Haigh says that their
numbers are growing, and Standard Chartered Bank has
recently taken this route.
The valuation of brands in banking also helps to create
new frontiers in franchising. Unlike the brand owners of
athletics clothing, banks have done relatively little to
leverage their brands, and concentrate on brand manage-
ment and design innovation. Although there are serious
regulatory considerations, franchising has also been virtu-
The Banker’s first Top 100 Brands provides an analysis of the value of branding to financial ally ignored by banks, but given proper valuation models
institutions, an asset that many banks fail to leverage. Stephen Timewell examines the results this area could be explored as a way to boost value from
brand management.
f money is fungible and banking institutions pro- But although The Banker and others have produced The most valuable brands
Express with $18.1bn. These four are the only four institu-
tions to achieve a triple ‘A’ brand rating, which is desig-
nated ‘extremely strong’ according to the above
methodology. Citigroup and HSBC are seen as good exam-
ples of how fragmented and undifferentiated banks have
become well-liked and valuable international bank brands.
The report, based on analysis of the world’s 500 largest
banks by market capitalisation plus other market players,
excludes Chinese bank brands this year due to lack of data
and also excludes market cap data where the brand is one of
several brands owned by a group. Analysing the results, the
top 20 most valuable banks in terms of branding are all
headquartered in Europe (nine) or the US (11), and a total
of 72 brands come from Europe and the US. Of the rest, six
came from Japan, five from Australia, and three each from
Brazil, Korea and Saudi Arabia.
Although brand values fall away significantly after the
top 20, investment and wholesale banks display surpris-
ingly large brand values. This is due to the lack of large
retail networks, infrastructure and similar tangible assets,
and to much of their value being intangible and linked to
key personnel and brand.
Brand value and market cap
In assessing the ratio of brand value to market cap, credit
card-oriented bank brands display the highest ratios
because non-rational and image-related factors are
regarded as significant drivers of demand in this sector.
For the same reason, consumer-focused banks are gener-
ally regarded as having higher brand value/market cap
ratios than business focused banks.
American Express has the highest ratio, 28.5%; and 13
of the top 20 have ratios that exceed 14%. Explanations
for both high and low ratios could be quite complex, how-
ever, due to the complicated brand royalty methodology.
For example, ABN AMRO has the second highest brand
value to market cap, reflecting the combination of a low
stock market valuation, a top quartile brand score and a
relatively high proportion of consumer banking, which
commands a higher royalty than wholesale banking.
All three Saudi Arabian banks have low brand value
ratios as a result of having high market caps relative to
reported revenues (the stream of notional royalties that is
discounted back to calculate trademark value is calcu-

I
vide a broadly similar range of products and
services built around money, then how do these
institutions differentiate themselves? Why is one
bank preferred over another? For years, banks
have traded on their name, reputation and loyal
customer base, often not realising that these
intangibles are probably their most valuable
asset and also the key to their competitive edge.
numerous listings on banks’ relative size, earnings and
structure, and rating agencies have provided copious listings
of relative risks, detailed valuations of banks’ intangible
assets, in particular their brands, have remained elusive.
Caught up in deep-rooted traditions and analysis of
their tangible assets, banks have often been slow to realise
the power and strategic importance of their ‘softer’ or
intangible assets. Scott Bedbury, former Starbuck’s
So what are world’s most valuable banking brands and
why? The top three banking brands are Citigroup, HSBC
and Bank of America, which are also the leading three
banks in The Banker’s latest Top 1000 World Banks rank-
ing based on Tier 1 capital (The Banker, July 2006, p224).
The brand value of the three banks is $35.1bn, $33.5bn
and $31.4bn respectively (based on Brand Finance
methodology, see page 23), well ahead of American
lated as a percentage of net revenue). The six Japanese
banks have low brand value ratios due to the combined
effect of a relatively high discount rate in the discounted
cashflow model due to a high equity risk premium in
Japan, a low terminal growth rate driven by low gross
domestic product (GDP) growth and a relatively high cor-
porate tax rate of 41% applied to the stream of notional
royalties. >>

20 NOVEMBER 2006 The Banker The Banker NOVEMBER 2006 21

cover story cover story

The valuation of brands in

banking helps to create new
frontiers in outsourcing
and franchising

marketing head and Nike advertising director, states in his
recent book: “I can think of no better organising princi-
ple for a company than the brand itself.” A well-managed
brand is seen to mobilise all of a company’s stakeholders
(employees, customers, investors, etc) to create value.
Not just a name
A brand is much more than the name above the door. It
is now acknowledged to be responsible for driving cus-
tomer acquisition, reducing customer churn rates and
staff turnover, thereby increasing profitability and help-
ing to influence analysts’ and investors’ perceptions. This
month, The Banker has joined with leading UK-based
independent brand valuation firm Brand Finance to pub-
lish the first publicly available table analysing the finan-
cial value of the world’s top 100 brands.
For the first time, the top 100 most valuable brands list-
ing provides not only detailed valuations of intangibles
using a transparent methodology (‘royalty relief ’) that has
been deemed ‘fit for use’ by tax and law courts around the
world, but also offers institutions the opportunity to cre-
ate new models to manage their intellectual property (IP)
needs better.
Brand Finance’s CEO, David Haigh, believes the
greater focus on marketing intangibles, the impact of
IFRS3 accounting standards and their effect on mergers
and acquisitions planning and integration, are leading
banks to establish separate IP companies. These brand-
holding companies provide brand control, help with tax
issues and planning for acquisitions. Although there are
few such companies at present, Mr Haigh says that their
numbers are growing, and Standard Chartered Bank has
recently taken this route.
The valuation of brands in banking also helps to create
new frontiers in franchising. Unlike the brand owners of
athletics clothing, banks have done relatively little to
leverage their brands, and concentrate on brand manage-
ment and design innovation. Although there are serious
regulatory considerations, franchising has also been virtu-
The Banker’s first Top 100 Brands provides an analysis of the value of branding to financial ally ignored by banks, but given proper valuation models
institutions, an asset that many banks fail to leverage. Stephen Timewell examines the results this area could be explored as a way to boost value from
brand management.
f money is fungible and banking institutions pro- But although The Banker and others have produced The most valuable brands
Express with $18.1bn. These four are the only four institu-
tions to achieve a triple ‘A’ brand rating, which is desig-
nated ‘extremely strong’ according to the above
methodology. Citigroup and HSBC are seen as good exam-
ples of how fragmented and undifferentiated banks have
become well-liked and valuable international bank brands.
The report, based on analysis of the world’s 500 largest
banks by market capitalisation plus other market players,
excludes Chinese bank brands this year due to lack of data
and also excludes market cap data where the brand is one of
several brands owned by a group. Analysing the results, the
top 20 most valuable banks in terms of branding are all
headquartered in Europe (nine) or the US (11), and a total
of 72 brands come from Europe and the US. Of the rest, six
came from Japan, five from Australia, and three each from
Brazil, Korea and Saudi Arabia.
Although brand values fall away significantly after the
top 20, investment and wholesale banks display surpris-
ingly large brand values. This is due to the lack of large
retail networks, infrastructure and similar tangible assets,
and to much of their value being intangible and linked to
key personnel and brand.
Brand value and market cap
In assessing the ratio of brand value to market cap, credit
card-oriented bank brands display the highest ratios
because non-rational and image-related factors are
regarded as significant drivers of demand in this sector.
For the same reason, consumer-focused banks are gener-
ally regarded as having higher brand value/market cap
ratios than business focused banks.
American Express has the highest ratio, 28.5%; and 13
of the top 20 have ratios that exceed 14%. Explanations
for both high and low ratios could be quite complex, how-
ever, due to the complicated brand royalty methodology.
For example, ABN AMRO has the second highest brand
value to market cap, reflecting the combination of a low
stock market valuation, a top quartile brand score and a
relatively high proportion of consumer banking, which
commands a higher royalty than wholesale banking.
All three Saudi Arabian banks have low brand value
ratios as a result of having high market caps relative to
reported revenues (the stream of notional royalties that is
discounted back to calculate trademark value is calcu-

I
vide a broadly similar range of products and
services built around money, then how do these
institutions differentiate themselves? Why is one
bank preferred over another? For years, banks
have traded on their name, reputation and loyal
customer base, often not realising that these
intangibles are probably their most valuable
asset and also the key to their competitive edge.
numerous listings on banks’ relative size, earnings and
structure, and rating agencies have provided copious listings
of relative risks, detailed valuations of banks’ intangible
assets, in particular their brands, have remained elusive.
Caught up in deep-rooted traditions and analysis of
their tangible assets, banks have often been slow to realise
the power and strategic importance of their ‘softer’ or
intangible assets. Scott Bedbury, former Starbuck’s
So what are world’s most valuable banking brands and
why? The top three banking brands are Citigroup, HSBC
and Bank of America, which are also the leading three
banks in The Banker’s latest Top 1000 World Banks rank-
ing based on Tier 1 capital (The Banker, July 2006, p224).
The brand value of the three banks is $35.1bn, $33.5bn
and $31.4bn respectively (based on Brand Finance
methodology, see page 23), well ahead of American
lated as a percentage of net revenue). The six Japanese
banks have low brand value ratios due to the combined
effect of a relatively high discount rate in the discounted
cashflow model due to a high equity risk premium in
Japan, a low terminal growth rate driven by low gross
domestic product (GDP) growth and a relatively high cor-
porate tax rate of 41% applied to the stream of notional
royalties. >>

20 NOVEMBER 2006 The Banker The Banker NOVEMBER 2006 21

cover story cover story

Different architecture would reach $18.5bn, putting JPMorgan Chase in fourth

The leading brands display different styles of brand place. The combination of Santander + Abbey would put

rating
Brand

BBB

BBB

BBB

BBB

BBB
BBB

BBB

BBB
BBB

BBB
BBB
AA-
AA-

AA-

AA-

AA-
A+

A+

A+

A+
AA
BB

BB

BB
BB

BB

BB
A-

A-

A-

A-

A-

A-
A-

A-
A-

A-

A-

A-

A-
architecture, which Brand Finance divides into three cat- Grupo Santander in fourth place. Royal Bank of

A
B

B
egories: monolithic, endorsed and pluralistic. The mono- Scotland + NatWest combined would reach 12th place.

Brand value/
lithic approach, as typified by HSBC, Barclays and Which approach is best? All three have their advocates

cap (%)
market

9.8%
16.1%
14.7%
8.6%
11.3%
12.4%
5.3%
7.7%
7.8%
N.A.
18.8%
7.5%
N.A.
7.8%
6.2%
15.4%
N.A.
11.6%
2.6%
14.6%
9.9%
13.6%
8.3%
6.8%
5.6%
10.6%
9.2%
8.4%
9.5%
10.4%
8.5%
14.0%
3.5%
7.7%
5.0%
5.4%
8.3%
7.9%
6.8%
4.4%
6.6%
8.6%
5.3%
5.1%
6.5%
1.8%
7.0%
1.7%
3.2%
2.3%
Fortis, with one name and one visual identity, contrasts but there is no definitive winner, except that the top five in
with the endorsed style of ABN AMRO and Santander, the list are either monolithic or endorsed. As more and
which use several different brands endorsed with a group more bank mergers take place around the world the brand-
name and visual identity. HBOS and Royal Bank of ing dilemma becomes more acute, though, and the analysis
Scotland have a pluralistic style, with several different to pick the brand that produces the strongest customer reac-

31.12.05)
24,522
14,722
14,853
25,156
18,675
16,944
39,304
26,296
25,978
N.A.
10,601
25,495
N.A.
22,728
27,972
11,148
N.A.
14,609
64,898
11,344
16,367
11,582
18,916
20,929
25,286
13,428
14,864
16,051
14,116
12,872
15,643
9,509
37,662
16,593
24,953
22,472
13,504
14,053
12,254
17,037
11,105
8,601
12,548
13,015
9,605
31,109
7,854
31,789
15,434
17,119
Market
brands existing side by side. tion and highest economic result becomes more critical.

($m
cap
While several brands are shown separately in the list, if A more measured understanding of banking brand
the brand portfolios were to be added cumulatively the valuations will help to avoid some of the brand blunders
so-called consolidated listing would change in the follow- of the past and help to create a platform for new focused
TB

Brand

2,396
2,365
2,185
2,172
2,116
2,105
2,090
2,031
2,029
2,017
1,991
1,925
1,859
1,784
1,727
1,716
1,713
1,693
1,657
1,652
1,617
1,573
1,570
1,426
1,424
1,419
1,371
1,349
1,337
1,335
1,335
1,333
1,305
1,278
1,244
1,225
1,126
1,110
835
745
737
736
670
663
624
571
550
536
498
392
ing way. The portfolio brand value of JPMorgan + Chase growth in the future.

2005
value
($m)
BRANDING METHODOLOGY

domicile
Country

MY
AU

AU
RU

HK
CA

CA

DK

CA
US
BR

BR

US

US

US

US

US
US

US
SG

US

SG

US

SG
US
KR

KR

KR
SA

DE

SA

SA
BE

BE
ES

AT

SE

SE

TR
of

IN

IN

JP

JP

JP

JP
IE

IE

IT

IT

THE METHODOLOGY
employed by Brand Finance in
this Top 100 Brands listing
IT
through a margin analysis of
Brand ratings definitions
comparable companies. Finally,
Rating Definition a competitive benchmarking

Bank Austria Creditanstalt

uses a discounted cashflow AAA Extremely strong study (Brand Index) is

National Bank of Canada

Mizuho Trust & Banking
Svenska Handelsbanken

North Fork Band Corp

technique to discount AA Very strong conducted to determine the

State Bank of India

Banca Antonveneta
Deutsche Postbank

Saudi British Bank

Bank of New York

BB&T Corporation
Bank of Montreal
A Strong

Regions Financial

Malayan Banking
estimated future royalties, at position of the bank’s brand

Al-Rajhi Banking

Hang Seng Bank

Allied Irish Bank

Fifth Third Bank

United Overseas
Charles Schwab
St George Bank
Banco do Brasil
Bank of Ireland

Suntrust Banks

Woori Finance
Kookmin Bank

Shinhan Bank

Nikko Cordial
Monte Paschi
an appropriate discount rate, BBB Average along the royalty rate range.

Danske Bank

Shinsei Bank
Bear Stearns
Rank Companies

Scotiabank
Banco Itaú

M&T Bank
Macquarie
Sberbank
BB Under-performing

Capitalia
to arrive at a net present

Nomura
Keycorp
Citizens

Samba

Isbank
Abbey

OCBC
Dexia
B Weak

ICICI
value: the value of the ßrandßeta®

KBC

DBS

SEB
Note: The ratings from AA to B can be altered by including a plus (+) or minus
trademark and associated ßrandßeta® analysis is a

100
(-) sign to show their more detailed positioning in comparison with the

52
53
54
55
56
57
58
59
60

62
63
64
65
66
67
68
69

72
73
74
75
76
77
78
79
80

82
83
84
85
86
87
88
89
90

92
93
94
95
96
97
98
99
51

61

70

81

91
71
intellectual property (brand benchmarking study of the
general rating group
value). The basic steps are strength, risk and future
Source: Brand Finance, Bloomberg, www.brandfinance.com
outlined below. potential of a brand relative to
1. Obtain brand-specific its competitor set. It is

AAA-

AAA-
AAA-
rating
Brand
financial and revenue data Determine royalty rate on the basis of mostly publicly conceptually similar to a credit

AA+
AAA
●

BBB

BBB

BBB

BBB
AA-
AA-

AA-

AA-
AA-

AA-
A+

A+

A+

A+

A+

A+
A+
A+
AA

AA

AA
A-

A-
A-

A-

A-

A-
A-

A-
A-
A-

A-
A
A

A
A

A
A

B
2. Model the market (to range available financial information. rating, which companies are
identify market demand and 4. Calculate future royalty This is an economic use awarded based on their

Brand value/
the position of individual income stream approach that determines the strength, risk and future

cap (%)
market

14.3%
18.4%
17.0%
28.3%
N.A.
14.6%
13.6%
18.1%
17.9%
N.A.
18.6%
18.9%
11.5%
14.2%
14.6%
14.7%
15.4%
14.7%
12.5%
N.A.
N.A.
6.4%
12.3%
N.A.
22.0%
N.A.
13.9%
N.A.
N.A.
12.7%
8.7%
13.7%
7.1%
2.7%
4.7%
N.A.
8.6%
16.0%
N.A.
N.A.
N.A.
6.3%
8.6%
16.9%
9.0%
9.6%
7.1%
12.1%
7.1%
8.8%
brands in the context of all 5. Calculate discount rate value of the brand in relation to earning potential.
other market competitors). specific to each bank the royalty rate that would be It serves the following
Brand Finance has used incorporating size, payable for its use were it purposes:
three forecast periods international presence, owned by a third party. The ● It quantifies the strength and

31.12.05)
● An initial two-year period reputation, gearing and royalty rate is applied to future performance of the brand

245,512
181,703
185,342
63,897
N.A.
103,522
105,067
67,796
67,955
N.A.
61,851
49,919
82,116
62,241
60,012
59,263
53,605
53,300
60,507
N.A.
N.A.
95,242
47,147
N.A.
25,877
N.A.
37,959
N.A.
N.A.
34,785
50,561
29,295
54,290
135,769
77,387
N.A.
40,412
20,223
N.A.
N.A.
N.A.
45,131
32,172
16,177
30,559
28,086
37,485
21,956
36,184
28,004
Market

using Institutional Brokers
Estimate System (IBES)
consensus forecasts
● A subsequent three-year
ßrandßeta® (see below)
6. Discount future royalty
stream (explicit forecast and
perpetuity periods) to a net
revenue to determine an
earnings stream that is
attributable to the brand. The
brand earnings stream is then
($m
cap
being valued.
● It provides an indication of
the risk attached to future
earnings of the brand, and can

Brand

35,148
33,495
31,426
18,109
17,063
15,137
14,277
12,278
12,182
12,083
11,519
9,434
9,430
8,835
8,732
8,712
8,240
7,856
7,553
6,383
6,169
6,090
5,820
5,705
5,701
5,354
5,274
4,997
4,918
4,424
4,397
4,018
3,835
3,656
3,612
3,552
3,482
3,243
3,178
3,176
2,995
2,845
2,776
2,739
2,738
2,699
2,663
2,649
2,565
2,475
2005
value
($m)
forecast period based on an present value = brand value discounted back to a net be used in the determination of
average of available IBES present value. an appropriate discount rate for

Source: Brand Finance (www.brandfinance.com)

figures, historic growth and Royalty relief approach Brand Finance determines the valuation purposes.

domicile
Country
GDP growth expectations The Brand Finance model uses appropriate royalty rate using a ● It provides a basis for value-

SW

AU

AU

AU

AU
GB

GB

GB

GB

GB
GB

GB

GB
CA

CA
CA
US

US
US

US

US
US

US
US
US
US

US

US

US

US

US

BR
NL

DE

NL

DE

DE

ZA
BE
FR

FR

FR
ES

ES

SE
of

JP

JP
JP
IT

IT
weighted by geographic split a ‘relief from royalty’ variety of means. Initially, a based brand tracking.

Canadian Imperial Bank of Commerce

of revenues methodology for two reasons. comparative study of publicly The brand rating incorporates

Commonwealth Bank of Australia

● A perpetuity growth figure First, it is the valuation available royalty agreements is both quantitative and qualitative

Standard Bank of South Africa

Bank of Tokyo-Mitsubishi UFJ
based on GDP growth methodology that is favoured undertaken to determine a data. The quantitative data was

Santander Central Hispano

TOP 100 BRANDS

expectations weighted by by the tax authorities and the range of royalty rates for the taken from Bloomberg, annual

Toronto-Dominion Bank
National Australia Bank
Royal Bank of Scotland

Royal Bank of Canada

geographic split of revenues courts because it calculates banking sector, differentiating reports and the banks’ own

Standard Chartered
Wells Fargo & Co
American Express

Sumitomo Mitsui

Bank of Scotland
Mizuho Financial
Société Générale
Bank of America

Hypovereinsbank
Morgan Stanley
3. Establish the royalty rate for brand values by reference to between consumer banking, investor relations materials. The

Goldman Sachs
Wachovia Corp

Credit Agricole
Deutsche Bank

Commerzbank
Merrill Lynch

Lehman Bros
Credit Suisse

Banca Intesa
Freddie Mac
BNP Paribas

ABN AMRO

Capital One

US Bancorp
Rank Companies

each brand: documented, third-party business banking, investment qualitative data was compiled

Lloyds TSB
JPMorgan

UniCredit

Bradesco
NatWest

Westpac
Barclays

Nordea
Halifax
● Calculate brand strength transactions; and second, banking and credit cards. The by the Brand Finance
Chase

Fortis
BBVA
HSBC

ANZ
UBS

ING
Citi

score because it can be performed range is then substantiated management teams.

12
13
14
15
16
17
18
19
20

22
23
24
25
26
27
28
29
30

32
33
34
35
36
37
38
39
40

42
43
44
45
46
47
48
49
50
10

21

31

41
11
1
2
3
4
5
6
7
8
9

22 NOVEMBER 2006 The Banker The Banker NOVEMBER 2006 23

cover story cover story

Different architecture would reach $18.5bn, putting JPMorgan Chase in fourth

The leading brands display different styles of brand place. The combination of Santander + Abbey would put

rating
Brand

BBB

BBB

BBB

BBB

BBB
BBB

BBB

BBB
BBB

BBB
BBB
AA-
AA-

AA-

AA-

AA-
A+

A+

A+

A+
AA
BB

BB

BB
BB

BB

BB
A-

A-

A-

A-

A-

A-
A-

A-
A-

A-

A-

A-

A-
architecture, which Brand Finance divides into three cat- Grupo Santander in fourth place. Royal Bank of

A
B

B
egories: monolithic, endorsed and pluralistic. The mono- Scotland + NatWest combined would reach 12th place.

Brand value/
lithic approach, as typified by HSBC, Barclays and Which approach is best? All three have their advocates

cap (%)
market

9.8%
16.1%
14.7%
8.6%
11.3%
12.4%
5.3%
7.7%
7.8%
N.A.
18.8%
7.5%
N.A.
7.8%
6.2%
15.4%
N.A.
11.6%
2.6%
14.6%
9.9%
13.6%
8.3%
6.8%
5.6%
10.6%
9.2%
8.4%
9.5%
10.4%
8.5%
14.0%
3.5%
7.7%
5.0%
5.4%
8.3%
7.9%
6.8%
4.4%
6.6%
8.6%
5.3%
5.1%
6.5%
1.8%
7.0%
1.7%
3.2%
2.3%
Fortis, with one name and one visual identity, contrasts but there is no definitive winner, except that the top five in
with the endorsed style of ABN AMRO and Santander, the list are either monolithic or endorsed. As more and
which use several different brands endorsed with a group more bank mergers take place around the world the brand-
name and visual identity. HBOS and Royal Bank of ing dilemma becomes more acute, though, and the analysis
Scotland have a pluralistic style, with several different to pick the brand that produces the strongest customer reac-

31.12.05)
24,522
14,722
14,853
25,156
18,675
16,944
39,304
26,296
25,978
N.A.
10,601
25,495
N.A.
22,728
27,972
11,148
N.A.
14,609
64,898
11,344
16,367
11,582
18,916
20,929
25,286
13,428
14,864
16,051
14,116
12,872
15,643
9,509
37,662
16,593
24,953
22,472
13,504
14,053
12,254
17,037
11,105
8,601
12,548
13,015
9,605
31,109
7,854
31,789
15,434
17,119
Market
brands existing side by side. tion and highest economic result becomes more critical.

($m
cap
While several brands are shown separately in the list, if A more measured understanding of banking brand
the brand portfolios were to be added cumulatively the valuations will help to avoid some of the brand blunders
so-called consolidated listing would change in the follow- of the past and help to create a platform for new focused
TB

Brand

2,396
2,365
2,185
2,172
2,116
2,105
2,090
2,031
2,029
2,017
1,991
1,925
1,859
1,784
1,727
1,716
1,713
1,693
1,657
1,652
1,617
1,573
1,570
1,426
1,424
1,419
1,371
1,349
1,337
1,335
1,335
1,333
1,305
1,278
1,244
1,225
1,126
1,110
835
745
737
736
670
663
624
571
550
536
498
392
ing way. The portfolio brand value of JPMorgan + Chase growth in the future.

2005
value
($m)
BRANDING METHODOLOGY

domicile
Country

MY
AU

AU
RU

HK
CA

CA

DK

CA
US
BR

BR

US

US

US

US

US
US

US
SG

US

SG

US

SG
US
KR

KR

KR
SA

DE

SA

SA
BE

BE
ES

AT

SE

SE

TR
of

IN

IN

JP

JP

JP

JP
IE

IE

IT

IT

THE METHODOLOGY
employed by Brand Finance in
this Top 100 Brands listing
IT
through a margin analysis of
Brand ratings definitions
comparable companies. Finally,
Rating Definition a competitive benchmarking

Bank Austria Creditanstalt

uses a discounted cashflow AAA Extremely strong study (Brand Index) is

National Bank of Canada

Mizuho Trust & Banking
Svenska Handelsbanken

North Fork Band Corp

technique to discount AA Very strong conducted to determine the

State Bank of India

Banca Antonveneta
Deutsche Postbank

Saudi British Bank

Bank of New York

BB&T Corporation
Bank of Montreal
A Strong

Regions Financial

Malayan Banking
estimated future royalties, at position of the bank’s brand

Al-Rajhi Banking

Hang Seng Bank

Allied Irish Bank

Fifth Third Bank

United Overseas
Charles Schwab
St George Bank
Banco do Brasil
Bank of Ireland

Suntrust Banks

Woori Finance
Kookmin Bank

Shinhan Bank

Nikko Cordial
Monte Paschi
an appropriate discount rate, BBB Average along the royalty rate range.

Danske Bank

Shinsei Bank
Bear Stearns
Rank Companies

Scotiabank
Banco Itaú

M&T Bank
Macquarie
Sberbank
BB Under-performing

Capitalia
to arrive at a net present

Nomura
Keycorp
Citizens

Samba

Isbank
Abbey

OCBC
Dexia
B Weak

ICICI
value: the value of the ßrandßeta®

KBC

DBS

SEB
Note: The ratings from AA to B can be altered by including a plus (+) or minus
trademark and associated ßrandßeta® analysis is a

100
(-) sign to show their more detailed positioning in comparison with the

52
53
54
55
56
57
58
59
60

62
63
64
65
66
67
68
69

72
73
74
75
76
77
78
79
80

82
83
84
85
86
87
88
89
90

92
93
94
95
96
97
98
99
51

61

70

81

91
71
intellectual property (brand benchmarking study of the
general rating group
value). The basic steps are strength, risk and future
Source: Brand Finance, Bloomberg, www.brandfinance.com
outlined below. potential of a brand relative to
1. Obtain brand-specific its competitor set. It is

AAA-

AAA-
AAA-
rating
Brand
financial and revenue data Determine royalty rate on the basis of mostly publicly conceptually similar to a credit

AA+
AAA
●

BBB

BBB

BBB

BBB
AA-
AA-

AA-

AA-
AA-

AA-
A+

A+

A+

A+

A+

A+
A+
A+
AA

AA

AA
A-

A-
A-

A-

A-

A-
A-

A-
A-
A-

A-
A
A

A
A

A
A

B
2. Model the market (to range available financial information. rating, which companies are
identify market demand and 4. Calculate future royalty This is an economic use awarded based on their

Brand value/
the position of individual income stream approach that determines the strength, risk and future

cap (%)
market

14.3%
18.4%
17.0%
28.3%
N.A.
14.6%
13.6%
18.1%
17.9%
N.A.
18.6%
18.9%
11.5%
14.2%
14.6%
14.7%
15.4%
14.7%
12.5%
N.A.
N.A.
6.4%
12.3%
N.A.
22.0%
N.A.
13.9%
N.A.
N.A.
12.7%
8.7%
13.7%
7.1%
2.7%
4.7%
N.A.
8.6%
16.0%
N.A.
N.A.
N.A.
6.3%
8.6%
16.9%
9.0%
9.6%
7.1%
12.1%
7.1%
8.8%
brands in the context of all 5. Calculate discount rate value of the brand in relation to earning potential.
other market competitors). specific to each bank the royalty rate that would be It serves the following
Brand Finance has used incorporating size, payable for its use were it purposes:
three forecast periods international presence, owned by a third party. The ● It quantifies the strength and

31.12.05)
● An initial two-year period reputation, gearing and royalty rate is applied to future performance of the brand

245,512
181,703
185,342
63,897
N.A.
103,522
105,067
67,796
67,955
N.A.
61,851
49,919
82,116
62,241
60,012
59,263
53,605
53,300
60,507
N.A.
N.A.
95,242
47,147
N.A.
25,877
N.A.
37,959
N.A.
N.A.
34,785
50,561
29,295
54,290
135,769
77,387
N.A.
40,412
20,223
N.A.
N.A.
N.A.
45,131
32,172
16,177
30,559
28,086
37,485
21,956
36,184
28,004
Market

using Institutional Brokers
Estimate System (IBES)
consensus forecasts
● A subsequent three-year
ßrandßeta® (see below)
6. Discount future royalty
stream (explicit forecast and
perpetuity periods) to a net
revenue to determine an
earnings stream that is
attributable to the brand. The
brand earnings stream is then
($m
cap
being valued.
● It provides an indication of
the risk attached to future
earnings of the brand, and can

Brand

35,148
33,495
31,426
18,109
17,063
15,137
14,277
12,278
12,182
12,083
11,519
9,434
9,430
8,835
8,732
8,712
8,240
7,856
7,553
6,383
6,169
6,090
5,820
5,705
5,701
5,354
5,274
4,997
4,918
4,424
4,397
4,018
3,835
3,656
3,612
3,552
3,482
3,243
3,178
3,176
2,995
2,845
2,776
2,739
2,738
2,699
2,663
2,649
2,565
2,475
2005
value
($m)
forecast period based on an present value = brand value discounted back to a net be used in the determination of
average of available IBES present value. an appropriate discount rate for

Source: Brand Finance (www.brandfinance.com)

figures, historic growth and Royalty relief approach Brand Finance determines the valuation purposes.

domicile
Country
GDP growth expectations The Brand Finance model uses appropriate royalty rate using a ● It provides a basis for value-

SW

AU

AU

AU

AU
GB

GB

GB

GB

GB
GB

GB

GB
CA

CA
CA
US

US
US

US

US
US

US
US
US
US

US

US

US

US

US

BR
NL

DE

NL

DE

DE

ZA
BE
FR

FR

FR
ES

ES

SE
of

JP

JP
JP
IT

IT
weighted by geographic split a ‘relief from royalty’ variety of means. Initially, a based brand tracking.

Canadian Imperial Bank of Commerce

of revenues methodology for two reasons. comparative study of publicly The brand rating incorporates

Commonwealth Bank of Australia

● A perpetuity growth figure First, it is the valuation available royalty agreements is both quantitative and qualitative

Standard Bank of South Africa

Bank of Tokyo-Mitsubishi UFJ
based on GDP growth methodology that is favoured undertaken to determine a data. The quantitative data was

Santander Central Hispano

TOP 100 BRANDS

expectations weighted by by the tax authorities and the range of royalty rates for the taken from Bloomberg, annual

Toronto-Dominion Bank
National Australia Bank
Royal Bank of Scotland

Royal Bank of Canada

geographic split of revenues courts because it calculates banking sector, differentiating reports and the banks’ own

Standard Chartered
Wells Fargo & Co
American Express

Sumitomo Mitsui

Bank of Scotland
Mizuho Financial
Société Générale
Bank of America

Hypovereinsbank
Morgan Stanley
3. Establish the royalty rate for brand values by reference to between consumer banking, investor relations materials. The

Goldman Sachs
Wachovia Corp

Credit Agricole
Deutsche Bank

Commerzbank
Merrill Lynch

Lehman Bros
Credit Suisse

Banca Intesa
Freddie Mac
BNP Paribas

ABN AMRO

Capital One

US Bancorp
Rank Companies

each brand: documented, third-party business banking, investment qualitative data was compiled

Lloyds TSB
JPMorgan

UniCredit

Bradesco
NatWest

Westpac
Barclays

Nordea
Halifax
● Calculate brand strength transactions; and second, banking and credit cards. The by the Brand Finance
Chase

Fortis
BBVA
HSBC

ANZ
UBS

ING
Citi

score because it can be performed range is then substantiated management teams.

12
13
14
15
16
17
18
19
20

22
23
24
25
26
27
28
29
30

32
33
34
35
36
37
38
39
40

42
43
44
45
46
47
48
49
50
10

21

31

41
11
1
2
3
4
5
6
7
8
9

22 NOVEMBER 2006 The Banker The Banker NOVEMBER 2006 23