bankofpunjabprcasestudyr-12667865361469-phpapp01

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Hits the ground running


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2

stock-takingin

1999-2000

Brand Equityof the Bank

Did Share Pricereflect the

Brand Equity?

How one translatedBrand Equity into

Share Value


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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

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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 Indias Private Sector Banks

Ranked No.22 amongst Indias Best Banks [ Private & Public

Banks]

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

/ MNC Banks]

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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

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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.

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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

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The problem could be in the following key areas:

Perceptions about the bank

Services compared to competition

Inadequate communications initiatives

Positioning of the Bank

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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

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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 BoPs capabilities

Credibility lower than the other peer banks

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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

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ICICI Bank @ that point of time :

Modern and technologically ahead

Proactive & prompt

The GenerationY of Banks

Good network of branches and easily accessible

At par with international / MNC banks

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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)

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@ 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

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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

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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]

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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

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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


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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 thepersonality

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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

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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

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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

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Share prices need not be a reflection of present

health

Most often share prices reflect the affirmation in the

companys future

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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 purpose 25


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Share valuation

is a matter of perception

it is valuation of the brand

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Valuation of a bank is a function of:

Operational viability

Present activity

Growth expectations, visibility and credibility

Vision for the future

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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

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Discerning investors would also look at:

Capital base

Staff & training

Culture

Level of technology

Composition of the Board of Directors

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A Scientific Process

Reflection of aspiration

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A strong brand has:

An identity

An identity that is positive

An on-going excitement about it that generates

expectations

Memorability

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Core

ProductPackaging Image

Association

B

R

AN

D

Delivery Of

Promises

Strong Brand

Personality & Credibility

STRONG VALUATION


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Our belief

strategy and discipline

will build the brand and the share value

The key question:

Can This Be Achieved?

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At a crossroad

Need to tackle issues like:

Perception of the Bank

Image of the Bank

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Association with Punjab too restrictive

Credibility low

No innovations perceived

Awareness on the bank pan-India very low

No USP

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Essential to have a national image

Need to promote an image of the promoters as visionaries or

ThoughtLeaders Project the bank as customer oriented and warm

Project the Bank as technologically advanced and efficient

Project the Bank as accessible everywhere

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

real terms and at the perception level

Create products and services that unify BoPs image across

the country

PR exercise to build up BoPs 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

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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 6months

Become aggressively consumer friendly

Innovate relationships with the consumer [even beyond the

banking need ]

Adopt a conscious image make-over route

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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

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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-media

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Build relationships with media

Initial months the focus on:

Familiarizing them

and Creating Credibility

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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 BoPs 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

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OBJECTIVE:

Creating awareness about the product by having Contest

Journey to Leadership which will run nationally for 3

months BoPs 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 ofBanking & Personal Finance Portals

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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.

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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 Bankall PSU banks though)

However, it was recommended that some detailed research

carried out on the advantages and disadvantages ofcontinuing with a name that was restrictive and has

associations of agriculture and regionalism

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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

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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

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THE SAMPLE MEDIA COVERAGE

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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.


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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

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'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 Centurion Bank of Punjab (CBoP) 52


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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/

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CENTURION BANK OF PUNJAB a part of

HDFC BANK IN 2008

HDFC Bank bought Times Bank from media publisher

Bennett Coleman & Co in 2000While 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

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The biggest merger in **Indian banking is about to happen. HDFCBank 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 Rs57 a share of CBoP.

In the pecking order, the merged entity will still be way below Indias

biggest private sector bank ICICI in terms of assets, but it will be

significantly bigger than Axis Bank. On Wednesday, officials of boththe 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
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Thus ended the story of the amazing journey of

Bank of Punjab

Documents

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