Hits the ground running

2

stock-taking

in 1999-2000

Brand Equity of the Bank

Did Share Price reflect the Brand Equity?

How one translated Brand Equity into Share

Value

1993 – Reserve Bank of India ( RBI – the Central Bank of India) opened the banking sector to allow Private Banks to operate in India once again

Private Banks those dominated the market till 2000▪ ICICI Bank

▪ HDFC Bank

▪ Global Trust Bank

BANK OF PUNJAB (BoP) TRAILED BANK OF PUNJAB (BoP) TRAILED

3

Set up in 1995 Successful Public Issue held under the stewardship

of Sardar Dr. Inderjit Singh , ex-Chairman of Punjab & Sindh Bank

Strong base in the Northern Indian Market , primarily in the state of Punjab

Share value quoted between Rs.13 and17 (Apr-June 2000)

4

Growth of Deposits during 1998 – 99 @ 52% [up from Rs.170 million to Rs. 260 million ]

Total Business during the period @ Rs.393.2 million [ up from Rs.260.8 million]

Industry surveys indicated Ranked No.11 amongst India’s Private Sector Banks Ranked No.22 amongst India’s Best Banks [ Private & Public

Banks] Ranked No.36 amongst all Banks in India [Including International

/ MNC Banks]

5

To be a financial supermarket (thought of it in 2000)

To have a significant presence in the country by

2005 with primary emphasis on retail banking

6

An exponential increase in its customer base :- One million customers in two years, up from the four hundred

thousands present in early 2000. - 15 additional branches in fiscal 2000 - 01. - Calcutta and Chennai branches ( Metro City Branches) to be

operational by early 2001. - install 100 ATMs with a focus on off-site installations by the end

of financial year of 2000 - 01.

A 24-hour customer care centre for tele-banking in place to manage customer queries and information services.

7

Network of 55 branches

Internet banking scheduled to go online in 2000 - 01

off - site ATMs and Debit cards on the anvil

Interconnected call-centres planned at Delhi, Chandigarh and

Mumbai

Recently joined MasterCard Global ATM Network

8

The problem could be in the following key areas:

Perceptions about the bank

Services compared to competition

Inadequate communications initiatives

Positioning of the Bank

9

A Quick survey reveals interesting insights :

Bank of Punjab lacked a definite identity

Most often confused with an Indian nationalized bank

(Punjab National Bank)

Did not have the image of being a modern or technologically

savvy Bank

10

Perceived as a regional bank

Perceived as a predominantly agrarian bank [perhaps due to

the association with the state of Punjab]

Lack of awareness on the BoP’s capabilities

Credibility lower than the other peer banks

11

Courteous and polite

Branch ambience rich but traditional

Environment not young

Executives lack the ‘conversion drive’ or laid-back in their

attitudes

Some degree of lack of awareness amongst existing

customers about the range of services

12

ICICI Bank @ that point of time : Modern and technologically ahead

Proactive & prompt

The ‘Generation Y’ of Banks

Good network of branches and easily accessible

At par with international / MNC banks

13

HDFC Bank @ that point of time : Friendly and reliable bank

Leader in deploying technology in its services

A leader in the personal loans products

Relatively large , especially by the virtue of buying out Times

Bank ( a Private Indian Bank promoted by a well-known

Indian media house)

14

@ that point of time : While the Public Sector Banks needed time to adapt their

wide and far flung branch-based database to operate

through the net technology , both ICICI & HDFC Banks, who

did not have this baggage, surged ahead

Their initiatives in technology-led strategy gave them the

image of leaders . All others were ‘me-too’

15

HDFC Bank had created a brand equity that reflected trust

and integrity

HDFC Bank in assistance / legacy with its promoter Company

( HDFC = Housing Development Finance Corporation Ltd) had

set up a center for housing finance to assist the government

& other institutions

16

ICICI Bank was planning to set up net-Kiosks for its customers

[ web active customer base 100 thousand ]

ICICI Bank was targeting the kids-market through parents

opening accounts for them on the net

ICICI Bank was in the process of setting up 20 city specific

portals [e.g.: www.cafemumbai.com]

17

Both banks were setting up shopping portals where

customers of the Banks could buy using their bank a/c

number

Both were positioning themselves as much more than just

banks . They were already perceived as ‘comprehensive

financial supermarkets’. They were focused at creating virtual

market places on the net

18

Global Trust Bank (GTB) @ that point of time :

ABACUS [Any Branch any customer]

My Time ATMs

2424 Phone Banking

ibank@gtb

GTB also tied-up with MindTree Consulting Solutions ( knowledge enabled software services

company)

MOUs with Indiainfo.com and Sharekhan.com ( various service providers in Financial Services space)

19

The leading Banks were already positioned as financial

supermarkets, with a personality that was young, aggressive

and creative

While Bank of Punjab worked to position itself as a financial

supermarket , the leaders could get repositioned as premium

‘Wal-Mart’ in retail banking space in India

The differentiators would be ‘the-ability-to-add-value’ , ‘the

global image’, and ‘the personality’

20

Over 70% of Banks (Public Sector Undertakings included –

PSU Banks) would be computerized within the year in India

All were aggressively looking at Information Technology

paddled services

Most resurrected PSU Banks would have larger networks and

penetration

Bank of Punjab would be one amongst many of Indian Banks

21

Moving ahead ... but so are many other banks

BoP did not have a strong enough identity

The identity, in fact, seemed to have some negatives

22

To be seen as dynamic Outrun the others

To be seen as innovative Product / IT Service difference

To be seen as vibrant Be the Hero in customer service

23

Share prices need not be a reflection of present

health

Most often share prices reflect the affirmation in the

company’s future

24

Bank of Baroda (PSU) HDFC

Profits Rs.95 million Rs.12.5 million

HDFC Bank valued @ Rs.480 million

BOB valued @ Rs.150 million

* These figures are nearest approximation for illustrative purpose25

Share valuation ……

is a matter of perception

it is valuation of the brand

26

Valuation of a bank is a function of:

Operational viability

Present activity

Growth expectations, visibility and credibility

Vision for the future

27

Market Valuers could look at a few key issues:

Is there a track record

Is it technologically viable

Any acquisitions or products on the cards

How will it sustain profits

28

Discerning investors would also look at:

Capital base

Staff & training

Culture

Level of technology

Composition of the Board of Directors

29

A Scientific Process

Reflection of ‘aspiration’……

30

A strong brand has:

An identity

An identity that is positive

An on-going excitement about it “that generates

expectations”

Memorability

31

32

Core Product

Packaging Image Association

BRAND

Delivery Of Promises

Strong Brand

Personality & Credibility

STRONG VALUATION

Our belief ……

strategy and discipline

will build the brand and the share value

The key question:

Can This Be Achieved?

33

At a crossroad……

Need to tackle issues like:

Perception of the Bank

Image of the Bank

34

Association with Punjab too restrictive

Credibility low

No innovations perceived

Awareness on the bank pan-India very low

No USP

35

Essential to have a ‘national’ image

Need to promote an image of the promoters as visionaries or

“Thought Leaders”

Project the bank as customer oriented and warm

Project the Bank as technologically advanced and efficient

Project the Bank as accessible everywhere

36

Bridge the gaps in the banks services and positioning , both in

real terms and at the perception level

Create products and services that unify BoP’s image across

the country

PR exercise to build up BoP’s visibility , credibility and

position it as a bank to watch out for

Conduct conferences targeted at Investors and Corporates to

raise the visibility with the Investors

37

Create visible activity amongst the retail segment in the 4

regions / 5 Metros and generate a unifying energy

Ensure that the core products at par with the best within 6

months

Become aggressively consumer friendly

Innovate relationships with the consumer [even beyond the

banking need ]

Adopt a conscious image make-over route

38

The Bank must ensure up-gradation of its banking facility on

the net : it was a MUST

The Bank to put in place a product that ‘unifies’ the bank

nationally [e.g. easily accessed ATMs or Credit Cards]

Initiate conferences in Mumbai, the financial hub of India, to

build on customer satisfaction and technology

39

Knowledge/convenience/Banking cafes ‘Journey to leadership’ contest / seminars Logo & identity programme Banking portal Launch of credit card School and college debates & projects on finance issues :

creating financial literacy among school ( in higher classes, VIZ Standard VIII,IX,X) going children and college going youth ( First Year )

Get to know relationship meetings with key-media40

Build relationships with media

Initial months the focus on: Familiarizing them

and Creating Credibility

41

OBJECTIVE: Create awareness about the bank amongst mainline papers

and business dailies Get BoP to close to the top of mind with the Press Feed information to the press on BoP’s products, new

services etc Initiate meetings with the bank s’ senior management for familiarization on selective basis Make presence felt in Mumbai on customer satisfaction and

technology

42

OBJECTIVE: Creating awareness about the product by having Contest

“Journey to Leadership” which will run nationally for 3 months BoP’s Financial Results to be Advertised as well as Press

announcements in all the mainline and financial dailies Create excitement amongst the customers through

demonstration of new products & services and launch of Banking & Personal Finance Portals

43

OBJECTIVE: Launch the Credits Cards all over the Country within the

period. This would be leveraged in the national press Create credibility with press conferences and also having

one-on-one interviews with the board members Position the Bank as customer focused Target the schools and colleges in a strategic manner Initiate inter-school debates on personal finances [sponsored

by the Bank] Sponsor projects on Technology Breakthroughs

These were the initial years of opening up of the Indian Banking sector with Credit Cards, Net Banking, ATM services, Connectivity in Branch Banking etc.

44

A name change has not been recommended in the plan only so as to keep it ‘name insensitive’ ( We have examples of Bank of Baroda, Bank of Maharashtra, Punjab National Bank – all PSU banks though)

However, it was recommended that some detailed research carried out on the advantages and disadvantages of continuing with a name that was restrictive and has associations of agriculture and regionalism

45

46

What was BoP…

Branded as a small regional bank

A desirable acquisition for the biggies

Perceived as an old economy bank

Low awareness level of various products

Lack of customer-service focus

47

PR Task Position BOP as new private sector technology savvy bank with

national presence, customer-focus and innovative products

PR Strategy Strategic Communications

Consistent & systematic flow of messages

48

THE SAMPLE MEDIA COVERAGE

49

I have only provided one simple collage of a few media clips to provide the flavour of the media report being in sync with the strategy. Interested readers can search the world-wide-web of relevant period and can look at various media reports from other print, wire and visual media. Unnecessary media clips would have made the file too heavy to load anyways. And to find examples to support strategy reference, one can always do Google Search for media reports.

50

BoP regularly featured in leading financial media

Perceived as a bank with a national presence and huge

growth potential

New private sector bank with a strong foundation – still a

probable takeover target though

A technology savvy & client driven bank offering latest

products & services

51

'Centurion Bank of Punjab'- “M&A” road for consolidation 'Centurion Bank of Punjab'- “M&A” road for consolidation

The price of BANK OF PUNJAB stocks steadily increased over next 4 years from

2000 till 2004, nearly 30 banks were in Private Sector Banking space in India at

that time

The top five controlled nearly 65% of the assets. Most of these private sector

banks were profitable and had adequate capital as well as technology edge

In 2005 BANK OF PUNJAB (BoP) and CENTURION BANK (CB) were merged to form In 2005 BANK OF PUNJAB (BoP) and CENTURION BANK (CB) were merged to form

Centurion Bank of Punjab (CBoP)Centurion Bank of Punjab (CBoP)

52

The Reserve Bank of India, the Indian Central Bank, approved the CBoP merger effective 1 October, 2005. The merger was at a swap ratio 9:4 and the combined bank was called Centurion Bank of Punjab

CBoP had a presence of 240 branches and extension counters, 386 ATMs, about 2.2 million customers. As on March 2005, the net worth of the combined entity was Rs. 69.6 million and at a capital adequacy ratio of 16.1%

http://www.business-standard.com/india/news/94-swap-ratio-for-bankpunjab-centurion-bank-merger/212660/

53

CENTURION BANK OF PUNJAB a part of HDFC BANK IN 2008

HDFC Bank bought Times Bank from media publisher Bennett Coleman & Co in 2000

While Centurion, which was bought out by Sabre Capital in 2003 after major losses, also bought Bank of Punjab and Lord Krishna Bank in 2005 ( Merged entity Centurion Bank of Punjab)

HDFC Bank bought Centurion Bank of Punjab and merged it with its mother Bank in 2008

54

“The biggest merger in **Indian banking is about to happen. HDFC Bank will take over Centurion Bank of Punjab (CBoP) in an all-stock deal. The respective bank boards are likely to meet on Saturday to consider the merger proposal. The share-swap deal, worth over Rs 10,000 crore, may be worked around the current market price of Rs 57 a share of CBoP.

“In the pecking order, the merged entity will still be way below India’s biggest private sector bank ICICI in terms of assets, but it will be significantly bigger than Axis Bank. On Wednesday, officials of both the banks held marathon meetings with a leading investment banker to discuss the finer points.”

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Centurion-Bank- of-Punjab-to-merge-with-HDFC-Bank/articleshow/2802712.cms

**Standard Chartered and Anz Grindlays merger was bigger in value but it was for whole of Asia, the Middle East and possibly some part of Africa 55

Thus ended the story of the amazing journey of Bank of Punjab