Rebranding in the banking industry following mergers and acquisitions

Rebranding in the bankingindustry following mergers and

acquisitionsMary Lambkin

Smurfit School of Business, University College Dublin, Dublin, Ireland, and

Laurent MuzellecDublin City University, Dublin, Ireland

Abstract

Purpose – This paper aims to examine how international banking groups manage their branding inthe context of successive mergers and acquisitions. It seeks to review of a number of case histories inorder to show that banking companies tend to evolve a multi-tiered system for absorbing andrebranding acquisitions and it also seeks to present a general framework to guide future research andpractice.

Design/methodology/approach – The banking industry has been undergoing major consolidationin recent years, with a number of global players emerging through successive mergers andacquisitions. These transactions vary in scale and location, from major mergers of large, equal-sizedinternational entities to acquisitions of smaller, local businesses in various countries all around theworld. This paper brings together the literature on mergers and acquisitions, which mostly comesfrom economics and finance, with the marketing literature on branding and rebranding, to create aframework to help us to understand the management challenge of rebranding bank brands in thiscontext. Citigroup and Credit Agricole are used as a preliminary test of this framework.

Findings – This analysis suggests that the branding problem varies according to the size andinternational status of the acquisitive bank. Very large banks with international brands such asCitigroup tend to follow a branded house strategy where they impose their master brand on allacquisitions resulting in a further enhancement of scale and brand strength. However, this generalstrategy conceals a more complex, multi-tiered approach with different types and sizes of acquisitionsbeing rebranded in different ways. Regional players such as Credit Agricole tend to opt for a house ofbrands strategy where their acquired companies retain their own name and brand franchise in localmarkets.

Research limitations/implications – The framework presented here is entirely new and requiresfurther testing. The evidence supplied here is interesting but preliminary and requires furthervalidation.

Practical implications – Most banking companies nowadays become involved in mergers andacquisitions at some stage, and face the task of realigning their brands in the aftermath of thesetransactions. This paper provides a systematic framework backed up by empirical evidence to helpthem to make these decisions.

Originality/value – The paper addresses a critically important strategic issue that has not beenaddressed in any detail in the marketing literature. The paper provides preliminary research evidenceand a framework to suggest hypotheses for further research.

Keywords Banking, Brands, Acquisitions and mergers, Consolidation

Paper type Case study

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0265-2323.htm

All logos reproduced with permission from Credit Agricole Group and Citigroup.

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Received November 2007Revised March 2008Accepted May 2008

International Journal of BankMarketingVol. 26 No. 5, 2008pp. 328-352q Emerald Group Publishing Limited0265-2323DOI 10.1108/02652320810894398

IntroductionThe banking industry worldwide has been consolidating at a dramatic rate over thepast 30 years, and this trend is ongoing. Over the two decades 1984-2003, the structureof the US banking industry underwent an unprecedented transformation, marked by asubstantial decline in the number of commercial banks and savings institutions and bya growing concentration of industry assets among a few dozen extremely largefinancial institutions (Berger et al., 1999; Jones and Critchfield, 2005). At year-end 1984,there were 15,084 banking and thrift organisations. By 2005, that number had fallen to6,500 – a decline of 57 per cent (Jones and Critchfield, 2005; Janicki and Prescott, 2006).In 2005, the ten largest banks held almost 60 per cent of the banking industry’s assetsand the top three held almost a quarter of all deposits.

A similar trend has occurred in Europe, but at a slightly less dramatic rate (Walknerand Raes, 2006). Between 1997 and 2003, the number of credit institutions fell byalmost 35 per cent in Germany, by more than 25 per cent in France and TheNetherlands, and by 20 per cent in the UK. For the EU 15 as a whole, the numberdeclined from 9,624 to 7,444, a reduction of more than 22 per cent. The number hadfallen further by 2005, to 6,308, and that continued into 2006 (PricewaterhouseCoopers,2007).

Developments in the global banking industry in the last two years have beendominated by the sub-prime crisis and the liquidity problems that have followed fromit. These problems have made financial institutions cautious about voluntary mergersand acquisitions; this year’s focus is more likely to be more on minimising the impactof the US sub-prime crisis on existing operations, as evidenced by the largewrite-downs announced by most of the world’s major banks. Notable exceptions havebeen the mergers and acquisitions brought about as a result of financial distress suchas the acquisition of Bear Sterns by JPMorgan in the USA, and that of SachsenLB byLandesbank Baden-Wurttemberg (LBBW) in Germany. Informed commentators aresuggesting, however, that further consolidation leading to increased scale is likely to bethe best long-term solution to problems such as those caused by the sub-prime crisis, sothe trend is probably likely to continue as soon as the immediate problems have beenovercome (Boston Consulting Group, 2008).

Most of the decline in the number of organisations was due to mergers andacquisitions (Jones and Critchfield, 2005). In the USA, mergers and acquisitions werethe single largest contributor to the net decline in banking organisations in every yearbut one between 1984 and 2003. During the entire period, 8,122 individual bank andthrift organisations disappeared through mergers and holding company purchases. Alarge majority of these were domestic (86 percent), split approximately half-and-halfbetween horizontal (same product category-banks acquiring other banks) anddiversifying (into new product areas such as insurance or stock-broking) (Berger et al.,1999).

The number of M&As was lower in Europe but still very substantial; between 1996and 2005, European banks made 816 acquisitions for a total value of e682 billion(PricewaterhouseCoopers, 2006). In past years, M&A transactions in the EU bankingsector have been predominantly domestic; between 1993 and 2003, the number ofmergers and acquisitions involving domestic credit institutions represented about 80per cent of total consolidation activity (Walkner and Raes, 2005). Cross-bordertransactions during those years mainly concerned intermediaries in asset management

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and investment banking, whilst more recently it has involved retail-orientedinstitutions with well-developed distribution networks. European cross-border M&Aactivity picked up in the second half of 2005 and early 2006 and continues to grow interms of deal value (Walkner and Raes, 2006). Cross-border deals are currentlyaccounting for about two thirds of transactions (PricewaterhouseCoopers, 2007).

This wave of consolidation has been attributed to many factors, both macro andmicro (Berger et al., 1999; Jones and Critchfield, 2005; Walkner and Raes, 2005). At themacroeconomic level, consolidation has been influenced by factors such as theincreasing globalisation of the international financial system, the liberalisation ofcapital movements across borders and financial deregulation within countries,technological advances particularly in transaction processing, and greater competition.From a microeconomic perspective, a bank’s decision to consolidate – to merge with oracquire another firm – reflects management strategy for maximising or preservingfirm value in the face of increased competitive pressure (Jones and Critchfield, 2005).For example, a merger strategy can be based on value-maximising motives, such asexploiting economies of scale and scope, or increasing profits through geographic andproduct diversification. In a survey of bank management, value-maximising motiveswere cited as the principal reason to undertake a merger (Group of Ten, 2001).

All in all, it is believed that the microeconomic factors are largely responsible for theconsolidation trend (Jones and Critchfield, 2005; Basu, 2006). One microeconomicvariable that is of special interest in this paper is that of branding, in particular the factthat every single merger or acquisition involves a branding or, more typically, arebranding decision, which can possibly affect the synergies achieved and the valuecreated by the combination of firms or businesses. Typically, the acquirer pays a largepremium for the goodwill or brand equity of the acquired firm and the challenge then isnot only to preserve the existing equity under the new ownership but, ideally, toexpand and enhance it.

Whether this will occur in practice is a very open question. There is a large body ofevidence in the finance literature showing that mergers and acquisitions do not tend toproduce the performance gains that were hoped for. In fact, the evidence is veryconsistent in showing that the main, and often the only, beneficiaries of acquisitiontransactions are the sellers who make a one-off gain from the purchase price premiumpaid to acquire their firm (Berger et al., 1999; Bruner, 2004; Moeller et al., 2005; Kaplan,2006). Furthermore, if any gains are made, it tends to be on the cost efficiency side, withno evidence of any increases in market power. This suggests that the anticipatedsynergies between the brands of the acquirer and the acquired company are rarelyrealised. This paper is concerned with examining why this may be.

Following a merger of two firms, a decision has to be taken as to what name toadopt to represent the combined entity. Similarly, acquirers of companies have todecide how to integrate their acquisitions into the parent group – whether to leavetheir original names to stand, whether to rename them under the new owner’s name, orwhether to find some other solution (joint names or an entirely new name). There arealso many issues involved in communicating any change of name and in winning overstakeholders so as to preserve the brand equity embodied in the acquired brand and itsunderlying business.

It hardly needs to be said that rebranding is a very costly exercise[1], as well ascarrying a high level of reputation risk, so it seems obvious that these decisions should

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be informed by strong theory and research. The objective of this paper is to bringtogether the academic literature on rebranding and mergers and acquisitions (M&A) inorder to identify the branding options available to firms facing this challenge.

Based on the literature and industry review, we propose a conceptual frameworkwhich puts branding at the heart of the M&A decision making process. An initialexamination of our propositions is then carried out in the context of two cases. Finally,this analysis is brought to a conclusion by identifying guidelines for managers facedwith making rebranding decisions.

A review of the available evidence suggests that rebranding is usually given lowpriority in merger negotiations and is typically decided on the basis of simpleexpediency after the deal is concluded, to bring some order to the untidy collections ofnames and entities that are inherited as a result of combining two firms and theircollective products and markets (Ettenson and Knowles, 2006). Ideally, however,rebranding should be driven by marketing considerations, to use the opportunity tosignal a new strategic focus to the company’s stakeholders and to extract synergiesfrom the brand equities of the merged entities.

The most important question, of course, is whether the rebranding choices thatcompanies make have a positive or negative impact on corporate performance.Research evidence from the mergers and acquisitions literature, mainly carried out byfinancial economists, measures performance in terms of cost efficiency, profitefficiency (revenue enhancement), and/or shareholder value. It does not typicallyconsider branding issues, which are the domain of marketing academics. It is hopedthat this paper will add some value by bringing a marketing perspective to thediscussion.

Literature review: rebranding in a M&A contextDefining branding and rebrandingThere are numerous definitions of brands and branding in the marketing literature, butall converge around the idea that a brand name is a unique name that identifies aproduct and differentiates it from competitors. In its dictionary of marketing terms, theAmerican Marketing Association defines a brand as “a name, term, design, symbol, orany other feature that identifies one seller’s good or service as distinct from those ofother sellers”[2]. Consequently, it seems appropriate to define rebranding as thecreation of a new name, term, symbol, design or a combination of them for anestablished brand with the intention of developing a new, differentiated position in themind of stakeholders and competitors (Muzellec and Lambkin, 2006).

Rebranding in the context of brand hierarchyRebranding can occur at three distinct levels in an organisation:

(1) corporate;

(2) strategic business unit; and

(3) product level.

This is illustrated diagrammatically in Figure 1. Corporate rebranding refers to therenaming of a whole corporate entity, often signifying a major strategic change orrepositioning. Some well-known examples in the financial services sector are the HongKong and Shanghai Bank becoming HSBC; United Bank Suisse (UBS) becoming UBS


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Warburg and UBS Paine Webber at various times and, latterly, going back to thesimpler UBS; Barings becoming ING Barings; and Abbey National shortening its nameto Abbey. Each of these moves reflects a different strategy emanating from a particularset of circumstances, the nature of which we wish to explore in this paper.

Rebranding of strategic business units within large corporations is the secondcategory. This refers to a situation where a subsidiary or division within a largercorporation is given a unique name to create a distinct identity separate from theparent. Citigroup’s decision to use the Smith Barney brand for its private clientbusiness is a case in point. The distinctive new names given to their internet bankingsubsidiaries – such as Egg by Prudential plc (since sold to Citigroup), and Cahoot byAbbey – also illustrate this category.

Rebranding of individual products also occurs, sometimes as a tactical move drivenby the desire to brand globally, to derive economies of scale in marketingcommunications and to benefit from spillovers in brand awareness across geographicborders. For example, Halifax-Bank of Scotland Ireland was rebranded as Halifax, amove which allowed the Irish brand to benefit from Halifax’s UK communicationcampaign running on UK-based networks (BBC, Sky, ITV, Channel 4), which arewidely watched by Irish consumers. A variation on this idea is when corporationschoose to sell third-party products under the supplier company’s name, such as Bankof Ireland selling Prudential products, or Barclays selling Norwich Union insurance,etc. Affinity brands are a variation on this category, with banks providing productsunder retailers’ names such as Citigroup supplying Sears credit cards, and co-brandingalso occurs such as Citigroup’s joint venture with Nikko Beans online bank in Japanand ZAO Bank in Russia.

A branded house or a house of brands?A further development on the concept of brand architecture has been to distinguishbetween a “branded house” and a “house of brands” (Aaker and Joachimstaler, 2000). Abranded house refers to a company with a single corporate brand name applied to all

Figure 1.Rebranding in the contextof brand hierarchy

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its businesses and products, while a house of brands refers to a holding companystructure with a corporate name and a whole collection of separate names for businessunits and products. Companies do not tend to conform exactly to one or other of thesecategories; it is more a case of displaying a general tendency in one or other directionwhile allowing for some exceptional items (Laforet and Saunders, 1999, 2005). Forexample, HSBC, the global financial services company, has shown a clear preferencefor a single brand name (a branded house) for all its acquisitions around the world, butchose to keep the name of the internet bank, First Direct, having taken over andrenamed its parent, the Midland Bank in the UK. The only visible sign of theacquisition was the appearance of the HSBC logo alongside the First Direct name.

Banks and other companies in financial services tend to conform to the brandedhouse category, with their corporate name being applied throughout their portfolio ofbusinesses and products. In this they are consistent with the broader category ofservices businesses, which tend to have narrow product lines that draw much of theirbrand equity from their corporate reputation. These are in direct contrast withconsumer products companies, which typically have long lines of individual productbrands with the corporate parent’s name being downplayed or even concealed (Laforetand Saunders, 1999, 2005).

The reason for these different branding strategies is not always obvious but itseems, in general, that the brand equity of services draws very much from thecorporate reputation (de Chernatony and Dall’Olmo Riley, 1999; de Ruyter and Wetzels,2000). In contrast, many consumer products have such strong brand equity in theirown right that it virtually eclipses that of the parent company.

Brand architecture in the context of mergers and acquisitionsIn the context of mergers and acquisitions, it can be helpful to think of changes andadditions in terms of how they impact different parts of the brand architecture.Changes or movements can occur in an upward or downward direction within singleproduct lines, or they can be applied across product lines or markets. A change in thecorporate brand designed to strengthen its equity can be carried down through thehierarchy to the lowest level and smallest product. For example, HSBC graduallyrebrands all its subsidiaries to create synergies between the local expertise of theacquired national brands (originally, Midland Bank in the UK, Republic National Bankin Mexico, or more recently CCF in France) and the global status of HSBC. Thisstrategy gives strength to HSBC’s claims to be “The World’s Local Bank”. On thecontrary, the equity of a very strong product brand can be leveraged upwards to addvalue at the corporate level. The example of Bank of Scotland, one of the largest banksin the UK, renaming itself Halifax Bank of Scotland (HBOS) following its acquisition ofthe building society is a case in point. HBOS has recently rebranded its Irish retailbusiness as Halifax on the grounds that that brand has a very strong reputation inretail banking.

Viewed across product lines and geographic markets, the question is whetherbrands can be stretched across product categories or markets or whether they have toremain within defined boundaries. For example, can a bank brand be applied toinsurance or securities or other products within its portfolio? Or can a brand that isclosely identified with one country or region be carried over successfully into othercountries?


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Evidence shows that most European M&A is domestic, suggesting that bankingcompanies do not find it easy or do not believe that they can be successful acrossjurisdictions (Walkner and Raes, 2005; PricewaterhouseCoopers, 2006).

Rebranding optionsMergers and acquisitions between any two firms create four options for rebranding, asshown in Figure 2 (Basu, 2006). The four options are:

(1) one brand, usually that of the acquirer (Firm A);

(2) a joint brand, where the names of the acquirer and the acquired are combined(A-B);

(3) a flexible brand, where both brands are kept and used selectively (A&B); and

(4) a new brand, where both previous brands are dropped in favour of an entirelynew one (C).

Acquisitions usually result in the elimination of the target firm’s corporate brand infavour of the acquirer, i.e. a one brand strategy in favour of the dominant brand (Basu,2006). In a study of 207 M&A deals in the USA, Ettenson and Knowles (2006) foundthat the acquirer company name replaced that of the target company immediately in 40per cent of cases. This strategy – which they called “backing the stronger horse” –was by far the most prevalent approach. The opposite strategy, of keeping the statusquo, was the second most frequent, representing 24 per cent of the cases studied.

A flexible or mixed branding strategy (A&B) is sometimes an option where anacquired firm has a strong franchise in one or more market segments and would dobetter to continue in that way. Citigroup’s retention of Smith Barney for its privateclient business is a case in point. HSBC also followed this approach in retaining theHousehold name for that business in the USA. This category accounted for about 15per cent of the cases studied by Ettenson and Knowles (2006).

Joint brands, where the names of acquirer and target were attached together (A-B),was the next most frequent strategy, but accounted for a smaller proportion of thesample, at 13 per cent. A joint brand is likely to result in the event of a merger of equals,each of which enjoys a strong franchise among its own customers (Basu, 2006). It is

Figure 2.Branding optionsfollowingmergers/acquisitions

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especially likely if each of the individual brands has evolved into a national icon whoseelimination would have repercussions both internally and externally. The creation ofLloydsTSB following the acquisition of the Trustee Savings Bank (TSB) by Lloyds inthe UK is a case in point, as is the creation of PermanentTSB in Ireland following theacquisition of the TSB Bank by the Irish Permanent Building Society.

Joint brands are also likely in the case of joint ventures, for example, where a largeinternational company partners with a local operator to enter the market. Citigroup’spartnerships with Nikko Beans online bank in Japan and with ZAO Bank in Russia areexamples of this.

It is also quite common for this strategy to be used as a temporary measure for ayear or two, to manage the transition gradually. Morgan Stanley’s acquisition ofDiscover Dean Witter in 1997 exemplifies a transitioning strategy. It first changed thename of the combined organisations to Morgan Stanley Dean Witter and Co. Tenmonths later the Discover name was dropped from the corporate name and, in April2002, the transition was completed with the elimination of the Dean Witter name.Morgan Stanley was back where it started but, presumably, the brand had absorbednew equity from the Discover and Dean Witter brands and now participates in marketsnew to it such as credit cards (Kumar and Blomqvist, 2004).

Similarly, UBS followed a transitioning strategy for some time after it acquired the UKinvestment banks S.G. Warburg Group and Dillon Read, and the US wealth managementcompany PaineWebber. The temporary co-branding strategy resulted in UBSWarburgand UBSPaineWebber. In summer 2003, UBS announced a move to a single brandstrategy and phased out the transitional names (Kumar and Blomqvist, 2004).

Finally, a new brand name (C) may be chosen for the merged group, although this isa much less frequent occurrence – 8 per cent of Ettenson and Knowles’s sample. Thisstrategy tends to be a last resort, although it may be justified for several reasons.Firstly, an ambitious company making successive acquisitions may end up with such aclumsy collection of brands that it seems easier to rationalise them all under one name.For example, two consecutive mergers took the insurance group Commercial Union(CU) to Commercial and General Union (CGU) and then to Commercial and GeneralNorwich Union (CGNU). The latter name and acronym is obviously clumsy, difficult toremember and fairly meaningless, so a new name, Aviva, was created. The challenge ofthis type of rebranding is to reconcile two apparently contradictory notions, which are:

(1) that the new company is the synthesis of long established corporations; and

(2) that the merger represents a new departure.

The tagline used by Aviva on its website illustrates this attempt: “We are a brand newcompany with 300 years of history”[3].

Rebranding parameters in the context of M&AIn the following sections, we identify key parameters which should be considered whendeciding on which rebranding strategy to adopt. The parameters considered are:

. the relative size and strength of the merged companies;

. the type of products or services offered;

. the relatedness of markets and products; and

. the geographic distance.


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These parameters were chosen because they have a long history in the economics andfinance literature and there is a considerable body of evidence attesting to theirimportance in mergers and acquisitions (Berger et al., 1999; Bruner, 2004; King et al.,2004; Jones and Critchfield, 2005; Walkner and Raes, 2005; Kaplan, 2006).

Relative size and strengthResearch evidence in the banking industry consistently shows that acquiring firmstend to be much larger than targets. A number of studies have found that, in asubstantial proportion of M&As, a larger, more efficient institution tends to take over asmaller, less efficient institution, presumably with the intention of spreading theexpertise of the more efficient organisation over additional resources. In the USA,acquiring banks appear to be more cost efficient than target banks on average (Pilloffand Santomero, 1997; Berger et al., 1999). Another analysis of shareholder valuecreation in the USA shows that big bank acquirers – those doing deals at least 50 percent of their own asset size – beat smaller acquirers by almost 30 per cent (James et al.,1997). They also beat the bank composite by about 15 per cent.

European studies have also found that large, profitable banks tend to be acquirers,while small, unprofitable banks tend to be targets (Focarelli et al., 2002). For example,in a recent study, Altunbas and Ibanez (2004) found that acquirers were seven timeslarger than targets on average (measured in terms of total assets). The general picturethey observed in a sample of 262 bank M&A deals (207 domestic and 55 cross-border)was that of large and generally more efficient banks taking over smaller, and relativelyless risky institutions with more diversified sources of income.

As expected, they also found that size differences play a major role in influencingpost-acquisition performance.

Studies by marketing academics have also shown that the relative size of acquirersand targets is an important variable in predicting the pattern of redeployment ofmarketing resources following M&As. In a study of 253 acquisitions in themanufacturing sector in the USA, Capron and Hulland (1999) found that redeploymentof marketing resources tends to be asymmetrical, with a high proportion ofredeployment from acquirers to targets but very little in the opposite direction. Theyalso found a strong, negative correlation between the relative size of the target and thedegree of redeployment from the acquirer. In other words, the larger the target relativeto the acquirer, the less it had need of a transfer of marketing skills or resources fromthe acquirer. The reason for this is probably that size is correlated with relativestrength, and this was borne out by a direct measurement of the relative strength ofmarketing resources; the stronger the target, the less likelihood that it will receive atransfer of resources from the acquirer.

Translating this into the context of rebranding, we can surmise that the likelihoodof rebranding the target firm with the brand name of the acquirer would also beinversely correlated with relative size and strength. Thus, we would expect a transferof brand name from acquirer to target to be high for relatively small, weak targets andlow for relatively large, strong targets. We might state this formally as follows:

P1. The likelihood of rebranding of targets by acquirers is inversely correlatedwith the relative size and marketing strength of the target. Small, weaktargets will tend to be rebranded while large, strong targets will not.

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Type of product: retail versus wholesaleThe markets for retail services differ from those for wholesale and capital marketservices in several respects, resulting in a far greater emphasis on branding in retailthan in wholesale banking. Firstly, retail bank customers show a very low propensityto switch banks whether as a result of inertia or brand loyalty. Secondly, thecompetitive landscape in retail banking is relatively diversified, with small banks andsecurities firms competing with large financial institutions resulting in a greater levelof market segmentation (Cabral et al., 2002). Thirdly, the proximity of banks tocustomers is still very important for retail banks even with the increasing use of, andaccess to, electronic banking. Although business-to-business branding is becomingmore relevant (Mudambi, 2002), branding in consumer markets is still of far greaterimportance. Customers can be emotionally involved with their brand (Fournier, 1998).In a retail banking environment, they may belong to the second or third generation ofcustomers (Boraks, 2007). The bank may have assisted them in one of the mostimportant decision in anyone’s life – the purchase of a home, for example.Customer-based brand equity occurs when the consumer is familiar with the brand andholds some favourable, strong, and unique brand associations in memory (Keller,1993). A rebranding involving a change of name could theoretically wipe away thepositive mental images that the brand usually stimulates (Muzellec, 2005). All of thesepoints would suggest that retail banks would benefit from retaining the status quo andavoiding rebranding where possible.

In contrast, business banking is far more mobile, with customers following the bestdeal available and being far less brand loyal. They are also well informed aboutchanges of ownership and realistic enough to accept such changes without anyrepercussions as long as the terms of the deal are still acceptable. Thus, rebranding isan easier option in wholesale banking than in retail.

Translating this into the context of rebranding, we might propose that acquirerswould be very likely to rebrand their targets if they have relatively stronger brandsthan their targets in the wholesale banking sector. However, the converse is probable inretail markets; here acquirers will tend to keep existing brands in order to preserveexisting customer relationships where those relationships are strong. They will only belikely to rebrand if the target firm has a poor reputation or weak customerrelationships that might benefit from a change to the acquirer’s name.

Stated formally:

P2. There will be a higher incidence of rebranding from acquirer to target inwholesale than in retail banking businesses.

Relatedness of markets and productsMerger studies generally measure the relatedness or similarity of the merging firms bymeans of one of two categories:

(1) horizontal/vertical/conglomerate; or

(2) level of overlap or similarity between lines of business.

The majority of bank mergers are horizontal – that is, they are mergers of banks withother banks, rather than of banks with other kinds of financial service businesses suchas insurance or stock broking (Berger et al., 1999). Even within the general category of


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horizontal mergers, however, there can be a lot of variation among firms, in theirproducts, markets, resources, management style and performance. Economistsstudying this topic look for similarities and differences among firms and try to seewhether they are systematically related to performance.

By now there is quite a large body of evidence that mergers among banks havingsubstantial elements of overlap or similarity in their products and geographicalcoverage create value, while dissimilarities tend to destroy shareholder value. Forexample, Altunbas and Ibanez (2004) examined the impact of pre-merger similaritiesbetween acquirers and targets on post-merger performance. They found that acquirersand targets were quite different in terms of their capital, credit risk, off-balance sheetand liquidity positions. In other words, they had a low level of similarity. Broadlyspeaking, their results supported the hypothesis that, strategically closer institutionstend to improve performance to a greater extent than dissimilar institutions, althoughresults differ for domestic and cross-border mergers and across some of the strategicvariables.

Using a sample of 204 mergers completed over the period from 1977 to 1996,Megginson et al. (2004), found that mergers that decrease focus (another word forsimilarity) result in significant losses in shareholder wealth, operating performanceand firm value over the three years following merger completion. Mergers that eitherpreserve or increase focus result in marginal improvements in long-term performance.These results are consistent with studies of the positive effect of corporate focus.

Studies outside of financial services have also found that diversifying M&As aregenerally value-reducing, while increases in corporate focus are value-enhancing(mentioned in Berger et al., 1999). Capron and Hulland (1999) found that high marketsimilarity is strongly related to marketing resource deployment. As the similarity ofthe markets served by the two firms increases, redeployment also increases.

Translating this into the context of rebranding, we may surmise that the greater thesimilarity between the businesses of the acquirer and the target, the more likely anintegration strategy will be pursued which would favour the possibility of operatingthe enlarged business under a single brand name. This would suggest the likelihood ofrebranding, in particular the migration of the acquired brand to that of the acquirer.For example, Barclays Group have gradually rebranded all of the Woolwich brancheswhich were selling the same types of products as its retail bank under the Barclaysname.

In contrast, where acquired businesses sell products that are dissimilar to those ofthe acquirer, there is less of a reason to rebrand. A bank buying an insurance company,for example, has less of an opportunity to extract positive synergies by rebrandingunder the bank name and, therefore, is less likely to do so. For example, when Lloydsacquired Scottish Widows and C&G, those companies were allowed to keep their brandidentities.

Stating these arguments as formal propositions, we may say the following:

P3. The higher the degree of similarity between markets, the more likely that theacquirer will rebrand the target under its own name, and vice versa.

Geographic distanceAccording to the available evidence, cross-border mergers and acquisitions have notbeen a major feature of the European banking sector. In terms of numbers, M&As

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among domestic credit institutions represent about 80 per cent of the total number ofdeals in the EU in each year since 1992, and account for about 90 per cent of the totaldeal value (Walkner and Raes, 2005). Some analysts have suggested that the rationalefor the large amount of domestic M&A compared to cross-border M&A derives fromthe fact that domestic M&A increases market power while cross-border M&A does not.

Research evidence also shows that foreign banks tend to have low market shares,and lower interest margins and lower profitability than domestic rivals (Claessens et al.,2001). This evidence would tend to discourage cross-border market entry, especially toretail banking markets where consumers are disinclined to switch accounts. In thelimited number of cases of cross-border market entry, a majority of firms have chosenacquisition of established local firms as their mode of entry rather than taking on thecost and risk of direct entry (Walkner and Raes, 2005).

However, this can also be controversial because of national sensibilities abouttransfer of ownership to foreigners. Such factors tend to argue for leaving the localname so as to avoid drawing attention to the fact of foreign ownership. For example,Danske Bank recently entered the Irish market by acquiring a local player calledNational Irish Bank. The image of this bank had been tarnished because of aninvestment product it offered that was deemed to be a tax avoidance scheme, and so adebate arose as to whether it would be preferable to rebrand the acquired bank underthe Danske name. This had another disadvantage in that it drew attention to the factthat the bank was now owned by foreigners, which could detract from its localbusiness. In the end, the National Irish Bank was rebranded as NIB with a new styleand identity supported by a heavy communications campaign. This solution has beenvery successful in circumnavigating both image problems and NIB is performing verywell in the business banking market for its new owners.

Summarising these points yields the following propositions:

P4a. The stronger the national identity of the acquirer brand, the less likely it willbe to impose its name on a cross-border acquisition.

P4b. The stronger the national identity of the acquired brand, the less likely theacquirer is to change it.

Methodology: preliminary test: the cases of Citigroup and Credit AgricoleA case study approach was chosen because of the exploratory nature of the researchand of the empirical necessity to investigate the phenomenon within its real-lifecontext. Corporate branding and rebranding are diffuse concepts embedded in aparticular context (Czarniawska, 2000). A small number of “critical” or “instrumental”cases can infer those concepts through qualitative data analysis. Reliance on one or afew cases might limit the generalisability of the findings; however, they can be helpfulin providing some preliminary insights with the objective of testing with a largersample at a later date (Stake, 1995).

The choice of Citigroup and Credit Agricole was governed by two main factors.Firstly, we wanted to choose companies that were similar in terms of their businessprofile but that had maximum variation on the variables of interest in our research.Both Citigroup and Credit Agricole are full-service banking firms that provide a widerange of services across a broad market spectrum from retail to wholesale and allshades in between. However, they differ widely in the parameters of interest to our


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study; in particular, they vary in size and in global coverage. As the largest bankinggroup in the world with activities in 100 countries, Citigroup is the ultimate example ofa global banking firm. Credit Agricole, in contrast, is mainly a European firm, stronglyidentified with France. Secondly, we wanted companies which had an active record ofmergers and acquisitions to give enough instances to enable us to identify a pattern intheir rebranding strategies, if such a pattern exists. In fact, both Citigroup and CreditAgricole have pursued very ambitious expansion strategies in recent decades, mostlyachieved by acquiring other companies, at home and abroad.

The information needed to study these cases was all factual; essentially a listing ofall mergers and acquisitions, and this was easily acquired from secondary sources –the companies’ own websites supplemented by annual reports and press coverageat the time of the acquisitions. This information was then classified by the researcherson the basis of core parameters such as relative size of acquirer and target, relatednessof businesses between acquirer and target (horizontal or diversifying acquisition),domestic or international, and by the type of rebranding implemented post-acquisition.These classifications were then validated by having them reviewed by companypersonnel to ensure their accuracy and to fill in any gaps.

The cases of Citigroup and Credit AgricoleCredit Agricole: history and backgroundCredit Agricole was founded in 1860. Its primary function was to supply credit forFrench agriculture. Credit Agricole SA is the largest banking group in France, thesecond largest in Europe and the sixth largest in the world by Tier 1 capital accordingto The Banker magazine. The group has a decentralised organisation, being majorityowned by 41 French Caisses Regionales de Credit Agricole Mutuel. Credit Agricole SAemploys more than 77,000 people and its market capitalisation at 29 December 2006was e47bn. Credit Lyonnais was founded in 1863 in Lyon; it was nationalised in 1945.In the 1990s it faced corruption accusations and scandals and in 2003 it was bought upby Credit Agricole and changed its name to LCL in 2006.

The CA group has two main objectives:

(1) to strengthen the Credit Agricole group’s leading positions in France; and

(2) to consolidate the international acquisitions made in 2006.

Through its subsidiaries, Credit Agricole SA is involved in the following services.Retail banking: France and international. Regional Banks (Caisse Regionale du

Credit Agricole) offer banking services for personal customers, farmers, corporatecustomers and local authorities, with a very strong regional presence. The RegionalBanks provide a full range of banking and financial products and services, includingmutual funds (money market, bonds, equities), life insurance, lending (particularlymortgage loans and consumer finance), and payment systems. LCL focuses onpersonal, small business and middle market banking, with a strong focus on urbanareas and a segmented customer approach.

Credit Agricole SA’s international banking operations are based principally inEurope and, to a lesser extent, in Africa/Middle-East and Latin America. CreditAgricole has forged partnerships with major banks in Italy (Banca Intesa), Portugal(Banco Espırito Santo) and Greece (Emporiki Bank).

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Specialised financial services. Sofinco is a specialist in consumer finance, distributedthrough retail outlets (cars, household equipment), a direct network of around 100branches, Regional Bank and Credit Lyonnais branches, and partnerships with majorretailers. Finaref is a specialist in remote provision of financial products (consumerfinance and insurance).

Asset management, insurance and private banking. The Group’s asset managementdivision comprises Segespar Group with its subsidiaries, including CAAM, and alsoBFT Gestion, and manages e479.3 billion worth of assets. It offers mutual funds forretail, corporate and institutional investors, and discretionary management services forcorporate and institutional investors.

Insurance. CA is considered as number two in life insurance in France, with itssubsidiary, Predica, offering investment and death and disability products to CAregional banks and Credit Lyonnais customers. Another subsidiary, Pacifica, offers avery broad range of property and casualty insurance products, which are sold throughthe regional banks.

Corporate and investment banking. Calyon was formed by the merger of CreditAgricole Indosuez and Credit Lyonnais’ corporate and investment banking activities tobecome Credit Agricole’s corporate and investment banking arm. Backed by theGroup’s credit ratings and financial solidity, Calyon is now a leading player in financialmarkets operating in 55 countries, and is ranked among Europe’s top ten corporate andinvestment banks.

To summarise, Credit Agricole’s brand architecture is typical of a varied brandstrategy which leans towards a “house of brands” architecture (Figure 3).

CitiGroup: history and backgroundCitigroup was formed on 8 October 1998 following the $140 billion merger of Citicorpand Travelers Group to create the world’s largest financial services organisation. Thehistory of the company is thus divided into the history of several firms that over time

Figure 3.Credit Agricole’s brand

architecture


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amalgamated into Citicorp. Citibank was founded in 1812 as the City Bank of NewYork. Citigroup, Inc. is nowadays a major financial services company, with 200 millioncustomer accounts in more than 100 nations. The first logo (1998-2007) of the mergedcompany was the “red umbrella” (Figure 4) inherited from Travellers. The companysold its Travelers Property and Casualty insurance underwriting business to Met Lifein 2005. Citigroup still sells all forms of insurance itself, but it no longer underwritesinsurance.

Despite divesting Traveler’s Insurance, Citigroup retained Travelers’ signature redumbrella logo as its own until February 2007 when it decided to adopt the corporatebrand “Citi” for itself and virtually all its subsidiaries (Figure 4), with the notableexception of Primerica, Banamex and Diners Club. Citigroup is divided into three majorbusiness groups:

(1) Global Consumer;

(2) Global Wealth Management; and

(3) Corporate and Investment Banking.

It also includes one stand-alone business, Citigroup Alternative Investments.Consumer markets. The global consumer group subdivides into credit cards,

consumer finance, and retail banking. The credit card business proposes 37 differenttypes of credit card, from Citiw Platinum Selectw to Citi PremierPassw Card. Theconsumer finance company, CitiFinancial, is one of the largest consumer financecompanies in the world. Finally, the retail bank division consists of Citibank, which isthe third largest retail bank in the USA. It has branches in countries throughout theworld. Interestingly however, the largest part of retail banking is Banamex, thenumber one bank in Mexico, which Citigroup owns.

Corporate and investment banking. The Corporate and Investment Banking (CIB)division handles large corporate cash management, trade, lending, and investmentbanking services worldwide.

Global Wealth Management. The Global Wealth Management division is composedof The Citigroup Private Bank, Smith Barney, and Citigroup Investment Research. TheCitigroup Private Bank provides banking and investment services to high net worthindividuals, private institutions, and law firms. Smith Barney, which was acquired byTravelers Group in 1993 and became part of Citigroup in 1998, is the second largeststockbroker in the world.

An additional division is Citigroup Alternative Investments (CAI) Group, which isan alternative investments platform that manages assets across five classes:

(1) private equity;

(2) hedge funds;

Figure 4.Citi (group) first logo andcurrent logo

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(3) structured products;

(4) managed futures; and

(5) real estate.

In summary, the brand architecture of Citi leans towards the branded house side of thebrand relationship spectrum, with most of its subsidiaries bearing the name and/orvisual identity of the group.

Testable propositionsWe now investigate the four propositions set out in the literature review in the contextof Credit Agricole’s and Citigroup mergers and acquisition strategy.

P1. The likelihood of rebranding of targets by acquirers is inversely correlatedwith the relative size and marketing strength of the target. Small, weaktargets will tend to be rebranded while large, strong targets will not.

This proposition seems to correspond to the approach of Credit Agricole. CreditLyonnais, which can be considered as a strong target in terms of marketing assets, wasnot rebranded with the name of its acquirer. At the time of the merger, the companyhad over 2,000 branches and had an estimated value of e19.5 billion. Althoughcompetitors in many areas, Credit Agricole’s retail outlets are primarily situated inrural and medium-sized cities, whereas 50 per cent of Credit Lyonnais’ branches arelocated in cities of more than 200,000 inhabitants. Credit Lyonnais is one of the oldestFrench banks (created in 1863), and was at the beginning of the twentieth century thelargest bank in the world. As a result of its long history and the strength of its retailnetwork, the brand equity of Credit Lyonnais can be considered as very strong. Theequity of the brand has been reinforced each year by sponsoring various sportingevents including the maillot jaune (yellow jersey) in the Tour de France for more than20 years.

The Credit Lyonnais corporation kept its name but the retail branches wereeventually changed to LCL (the acronym for Le Credit Lyonnais) while keeping itshistorical visual identity of yellow and blue (Figure 5). In the press release “One Group,two banks” (September 2006), Credit Agricole justifies its strategy thus:

By choosing to maintain an independent Credit Lyonnais branch network, Credit Agricole iscapitalising on the excellent fit between the two brands. They do not have the samecompetitors or customers, or even the same growth challenges. The strategy is therefore toaccentuate the differences by forcefully expressing their respective positioning. Hence therebranding of Credit Lyonnais as LCL and the new positioning adopted by the RegionalBanks a year ago, supported by a whole array of commercial initiatives (new products, newservices, new distribution channels).

Figure 5.The new logo of Credit

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The proposition that “weak” targets are rebranded but not strong targets also seems tobe verified by Citigroup’s attitude towards its subsidiaries. In the retail market, Citigradually rebranded all the targets acquired in the USA. As the third largest federalretail bank in the USA, all the local banks acquired by Citi were rebranded. Forexample, in 2001, Citibank NA acquired European American Bank from ABN AMROfor $1.6 billion and subsequently proceeded to change its name.

More recently, First American Bank, a local bank in Texas, became Citibank Texasfollowing its acquisition by CitiGroup in 2005.

P2. There will be a higher incidence of rebranding from acquirer to target inwholesale than in retail banking businesses.

Based on the evidence collected from the case, this assertion is also confirmed in thecase of Credit Agricole. Indeed, Credit Lyonnais and Credit Agricole are primarily retailbanks, but it is precisely in this sector that the rebranding did not occur. In businessmarkets, on the contrary, rebranding occurred in order to signify the strength acquiredby the newly merged companies. Here, two scenarios can be identified.

In the case of the investment banks, the branches of Credit Lyonnais and CreditAgricole Indosuez were merged and renamed under the name Calyon (the coined wordfor CA/Credit Agricole and Lyon/Credit Lyonnais). The visual identity of the newcompany leans towards Credit Agricole marketing aesthetics (see Figure 6; CA logos,grey and red colours of the trade bank).

The second scenario is illustrated by the 2005 merger of Credit Agricole IndosuezLuxembourg and Credit Lyonnais Luxembourg, where the name of the acquirer isadopted for the merged company: Credit Agricole Luxembourg, the Credit AgricoleGroup’s international private bank within the European Union.

In the area of retail banking, in contrast, consumer-based brand equity (Keller, 1993)embodied in the name Credit Lyonnais led to a branding strategy where the names ofboth entities were maintained.

For Citigroup, the evidence shows that rebranding of the target firms occurred inboth markets but to a different degree. In the business-to-business sector, partial andtotal rebrandings have occurred. For example, following Citigroup’s acquisition of theGolden State Bancorp in 2002, its subsidiary, Cal Fed, merged into Citibank FSB andimmediately acquired its name. In contrast, the names Salomon and Smith Barley,which were acquired by Travelers Group and became part of Citigroup in 1998, wereretained for several years, and continued to trade as Salomon Smith Barney. A recentreorganisation, however, has led to this entity being renamed as Citigroup GlobalMarkets, Inc. The Salomon Brothers name has now completely vanished, but the SmithBarney name is still used as a service mark of Citigroup Global Markets (Figure 7).

In the US retail market, Citigroup has gradually rebranded virtually all acquiredfirms under its own name (Citibank). Hence, contrary to our expectation, in the case ofCitigroup, it seems that the rebranding strategy – at the national level – has been more

Figure 6.The visual identity of theinvestment bank

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systematic in the retail sector than in the wholesale sector, where a dual/endorsedbranding strategy is still being used.

P3. The higher the degree of similarity between markets, the more likely that theacquirer will rebrand the target under its own name, and vice versa.

This proposition cannot be confirmed or rejected. Evidence shows divergent strategiesirrespective of the similarities between markets.

In the case of Credit Agricole, its two home-grown insurance businesses were givendistinctive, new brand names – Predica and Pacifica. Insurance is typically consideredto be quite a different business to banking and is often kept at arm’s length by banksthrough separate branding of the company’s name. Credit Agricole took a similarapproach for its acquired brand Sofinco, a consumer credit company, which was notrebranded upon acquisition and continues to trade under its original name. Manybanks have consumer credit arms that charge a higher rate of interest than the mainbank, and it makes sense to keep these at one remove from the parent company byseparate branding. The branding strategy followed by Credit Agricole with these twosubsidiaries seems to confirm P3, that dissimilar products are more likely to be keptunder separate brand names and not rebranded or brought under the parent.

The opposite of this should also hold true, however, if this proposition is to beaccepted, i.e. subsidiaries with identical or very similar businesses should beconsolidated under a single brand. However, this does not seem to hold true in the caseof Credit Agricole, which did not impose its name on Credit Lyonnais following itsacquisition, even though both are in retail banking which are identical or at least verysimilar markets. The logic for maintaining this brand separation seems to derive fromdissimilarities in the markets served rather than in the products supplied. CreditAgricole is obviously closely associated with rural markets related to its agriculturalorigins, while Credit Lyonnais serves a predominantly urban market which would noteasily identify with a brand associated with agriculture.

In the case of Citi, it seems that an endorsed branding strategy has been chosenregardless of the degree of relatedness of the market. In the consumer sector, Citi hasrebranded all its subsidiaries so that they reflect their belonging to Citi group. AsFigure 8 demonstrates, this is done in the various, unrelated sectors in which Citi isinvolved.

P4a. The stronger the national identity of the acquirer brand, the less likely it willbe to impose its name on a cross-border acquisition.

Figure 7.Smith Barney, Citigroup

Global Markets logo

Figure 8.Brand logos for consumer

credit, mortgage andinsurance at CitiGroup


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P4b. The stronger the national identity of the acquired brand, the less likely theacquirer is to change it.

To investigate P4, we look at the branding strategies put forward by Credit Agricole.Credit Agricole in fact uses a mixed branding strategy. In retail banking, two differentapproaches can be observed:

(1) endorsement by Credit Agricole but preservation of the subsidiary marketingaesthetics; and

(2) endorsement and alignment of the visual identity of the subsidiary with headoffice.

In the first instance, the two subsidiaries of Credit Agricole in Italy are keeping theirvisual identity but are being endorsed by Credit Agricole (Figure 9). In the second case,the integration with the head office is more prominent as the logo of Credit Agricolebecomes the logo of the local subsidiaries (Figure 10).

The fact that different strategies exist for different countries indicates that thenational identity of the acquired brand plays an important role in the rebrandingdecision (P4b). A complementary explanation could also be proposed. In the case ofIndex, Credit Uruguay, Meridian and Egypt, Credit Agricole might represent a solidWestern reference in developing (Uruguay and Egypt) and transitioning (Ukraine,Serbia) markets. In Italy, a French bank such as Credit Agricole does not represent astrong guarantee relative to the long-established national icons, Cariparma andFriuladria. In other words, the relative weaknesses or strengths of the acquired brandare derived from the strengths or weaknesses of the local market.

Similarly, Citibank can be seen as a strong global brand with a relatively weaknational identity. The data suggest that Citibank’s international branding strategy is torebrand acquired local targets. However, the company’s international expansion ismainly driven by organic growth and not through means of mergers and acquisition.The case of Banamex suggests that the national identity of the acquired bank (P4b) isalso a determining factor. In this instance, Banamex’s strong brand equity and nationalidentity led Citibank to adapt its international branding strategy to the specificconditions in the Mexican market. Strong targets such as Banamex in Mexico get tokeep their brand. Medium strength targets are partially rebranded such asNikkoCitigroup in Japan (Figure 11). In the cases of CA and Citibank it seems thatthe stronger the national identity of the acquired brand, the less likely the acquirer is tochange it.

Table I shows a summary of whether our propositions are accepted for the cases ofCiti Group and Credit Agricole.

Figure 10.Logos of the Ukrainian,Uruguayan, Serbian andEgyptian subsidiaries

Figure 9.Logos of the Italiansubsidiaries

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Discussion and conclusionsThe objective of this paper was to bring together the academic literature on brandingand mergers and acquisitions (M&A) in order to highlight the close connectionbetween the two topics and to draw attention to the need for corporate executives tofactor branding issues into their strategic decisions. The evidence to date suggests thatbranding has been treated as an afterthought in the context of M&A decisions,something to be tidied up in the implementation phase after the deal has taken place,rather than being considered as an intrinsic part of the decision (Ettenson andKnowles, 2006). We would argue that this oversight represents a lost opportunity, andthat a more conscious consideration of branding in the planning phase would provide ameans to enhance the value of the deal.

Based on the literature and industry review, we proposed a conceptualframework that puts branding at the heart of M&A decision making process. A setof propositions was put forward concerning the strategic and structural factors thatare likely to influence the nature and direction of rebranding decisions in thecontext of M&A transactions. These propositions dealt with the relative size ofacquirers and targets, whether their businesses were in consumer orbusiness-to-business, the similarity/dissimilarity of their businesses (e.g. bankingversus insurance), and geographic issues, i.e. whether the acquisition is domestic ortransnational. An initial investigation of our propositions was then carried out byexamining two prominent cases in the financial services industry, namely CreditAgricole and Citigroup.

The analysis of the two cases suggested that the size and marketing strength of thetarget relative to the one of the acquirer is the most significant variable influencing thebranding decision. In both cases, decisions to rebrand can be directly traced to the

Figure 11.An illustration of different

rebranding strategies

Propositions CA Citi Group

P1 The likelihood of rebranding of targets by acquirersis inversely correlated with the relative size andmarketing strength of the target. Small, weak targetswill tend to be rebranded while large, strong targetswill not

Accepted Accepted

P2 There will be a lower incidence of rebranding inconsumer (retail) markets than in businessesmarkets

Accepted Not accepted

P3 The higher the degree of similarity between markets,the more likely that the acquirer will rebrand thetarget under its own name, and vice versa.

Not accepted Not accepted

P4a The stronger the national identity of the acquirerbrand, the less likely it will be to impose its name ona cross-border acquisition

Accepted Accepted

P4b The stronger the national identity of the acquiredbrand, the less likely the acquirer is to change it

Accepted Accepted Table I.Summary of propositions


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relative market weight of the players involved (P1). The general proposition thatrelatively small “weak” targets would be rebranded but not strong targets seems to bestrongly supported by the evidence from both Credit Agricole and Citigroup. Even inan international context (P4), exceptions to the branded house strategy pursued by Citiseemed to be based on the relative marketing strengths of the target (as in the case ofBanamex, for example).

The evidence also suggested that rebranding is more likely to occur in wholesalethan in retail banking businesses, supporting P2. Credit Lyonnais and Credit Agricoleare both primarily retail banks and rebranding seemed far less likely to occur in thatpart of their businesses. In their wholesale businesses, on the contrary, rebrandingoccurred very frequently in order to signify the strength acquired by the newly mergedcompanies.

Another interesting but unexpected finding is that the degree of similarity betweenmarkets does not seem to be a determining variable in the decision to rebrand or not(P3). In the case of Citigroup, the company seemed to follow a clear “branded house”strategy which implies a rebranding of the targeted firm regardless of its domain ofactivity. The “Citi” brand name is applied to replace multiple, complex sub-brandstructures to achieve cost efficiencies. In such a corporate dominant system, thereputation of the corporation is believed to critically influence consumers’ perceptionsof the services (Knox, 2004). In the case of Credit Agricole, the pattern of the brandstrategy is less obvious. The corporate investment bank was actually rebranded asCalyon, with a clear endorsement of Credit Agricole, but the retail branch of the CreditLyonnais kept its very distinctive visual identity.

Our evidence also provides support for P4a and P4b, which suggest that thenational identity of the acquirer and the acquired brand would play an important rolein the decision as to whether to rebrand. In the cases of CA and Citibank it seems thatthe stronger the national identity of the acquired brand, the less likely the acquirer is tochange it. The case of Banamex in Mexico is the most vivid illustration of this. CreditAgricole follows a slightly different strategy, although one that is still consistent withthe idea that acquired brands with strong national heritage would be less likely to berebranded. They opted for a brand endorsement strategy, leaving the acquired brandswith their original names but adding the new parent’s name as an endorsement. Insome cases, the acquired brands also retain their visual identity but in others they arebrought into alignment with the Credit Agricole identity. The two subsidiaries ofCredit Agricole in Italy, for example, are keeping their visual identity but are beingendorsed by Credit Agricole.

Summarising the findings of these case studies, it seems that both companiesactually follow a mixed branding strategy, the logic for which is not easy toascertain. If a branded house is designed to bring synergies among the variouslevels of the brand hierarchy, how can Citi leave Banamex as an independent brandentity when it is Citibank’s most powerful retail business unit? Equally, if a houseof brands is designed to allow each brand unit to maximise its own brand equity,why did Credit Agricole choose to suppress the equity of Credit LyonnaisInvestment bank?

Such anomalies demonstrate the complexity of the branding decisions facing largecompanies, such as Credit Agricole and Citigroup, which have broad portfolios ofproducts serving multiple geographic markets. Earlier research suggests that the

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dominant branding strategy practised by such companies is best described as “mixedbranding”, with few or none matching closely to the extreme models of either a“branded house” or a “house of brands” (Laforet and Saunders, 1999, 2005). Ourfindings broadly corroborate this evidence but go a step further by suggesting that themixed strategy is not random or an accident of history, but is the result of a practicalstrategy for building a coherent portfolio of brands over time and through a sequenceof acquisitions. Our findings suggest that the companies had a definite brandingstrategy that tended towards either a branded house (in the case of Citigroup) or ahouse of brands (in the case of Credit Agricole). This general strategy was modified,however, to suit particular circumstances, with the resulting portfolio divergingsomewhat from the theoretical model.

Of course, these findings are speculative, based on a review of secondary data onwhat the companies actually did. There is obviously considerable scope for furtherresearch to validate these findings, perhaps starting with interviews with thecompanies’ personnel to get first hand information on their strategic thinking at thetime. There is also an interesting opportunity to see whether and how customersresponded in cases where acquired businesses were rebranded or left as before. Werecustomers aware of the change of ownership? Did rebranding affect their attitudetowards their bank? Did their behaviour change as a result? Brand tracking studieswhich permit an ex ante and ex post analysis of attitudes and behaviour would be theideal way to gather this information if the case companies carried out such studies. Inthe absence of this, however, an ex post study of attitudes and behaviour would be thenext best way of gathering useful information on this topic.

On a broader note, the role of marketing in mergers and acquisitions is a veryimportant question with many dimensions, few of which have yet been addressed bymarketing researchers. The issue of rebranding which this paper addressed is just onetopic among many and there is obviously considerable scope for further research. Themotivation for mergers and acquisitions needs to be examined to establish the extent towhich marketing objectives are the drivers of the transactions, as distinct from costsavings or other operational benefits, which have received far more research attention.The extent to which these marketing objectives are achieved post-acquisition isanother key question and, in particular, the issue of whether the brand equity acquiredthrough merger or acquisition, typically at a high cost, is actually preserved orenhanced post-acquisition, or absorbed and lost. These questions raise difficultmeasurement issues which might be best addressed through a collaborative effort bymarketing and economic researchers.

Notes

1. Abbey National in the UK spent £11 million in implementing a slight change of name(dropping the word “National”) (Dickson, 2003).

2. See www.marketingpower.com/mg-dictionary.php (accessed 24 April 2008).

3. Source: www.aviva.com (accessed 6 June 2003).

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PricewaterhouseCoopers (2007), Financial Services 2007 – Issues, Insights and Solutions,PricewaterhouseCoopers, London.

Stake, R.E. (1995), The Art of Case Study, Sage Publications, Thousand Oaks, CA.

Walkner, C. and Raes, J.-P. (2005), “Integration and consolidation in EU banking – an unfinishedbusiness”, European Commission Economic Papers, No. 226, European Commission,Brussels, April.

Walkner, C. and Raes, J.-P. (2006), EU Banking Structures, European Central Bank, Frankfurt amMain.

Further reading

Kotler, P. (1992), Marketing Management, Prentice-Hall, Englewood Cliffs, NJ.

McKinsey and Co. (2002), “Europe’s banks: verging on merging”, McKinsey Quarterly, p. 3.


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PricewaterhouseCoopers (2006), Financial Services M&A: Review of and Outlook for Mergers andAcquisitions in the European Financial Services Market, PricewaterhouseCoopers, London,April.

About the authorsMary Lambkin is Professor of Marketing at the Smurfit School of Business at University CollegeDublin. She has published widely in the leading marketing journals and is also involved in thebusiness world, serving as a non-executive director of several major companies. Mary Lambkinis the corresponding author and can be contacted at: [email protected]

Laurent Muzellec is a lecturer at Dublin City University. He holds a PhD from the School ofBusiness at University College Dublin, an MBA from Texas A&M International University and aBA in Political Science from IEP, France. He has worked as a trade attache for the FrenchDiplomatic Service and as a business development manager for a hi-tech company.

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