Changes in the value of banking brands last year added weight to the argument that financial dominance is shifting eastwards.

The combined brand value of China’s lenders has surpassed that of the US for the first time, worth a total of $258 billion, according to Brand Finance, an organisation tracking such developments. The figures also show how Deutsche Bank, Germany’s largest lender, has been hit hard, while other European banks have also languished.

The combined brand value of the Chinese banks accounts for 24 per cent of the total brand value of the Brand Finance Banking 500, while the US accounts for 23 per cent.

China’s consumers “demonstrate a lack of cynicism, an affinity for brands and economic patriotism that gives their banks a solid foundation that (post 2008) western banks cannot hope to match,” the survey found.

Another factor driving Chinese bank growth has been the foreign merger and acquisition activity of Chinese corporates, raising the profile of banks beyond their home turf.

“Chinese banks are being carried along in the slipstream of its industrial giants as they grow and expand into international markets. Facilitating international deals boosts revenues, but more importantly, enables the banks to build their reputations with potential clients across the world,” said David Haigh, chief executive of Brand Finance.

Already the world’s biggest bank by assets, ICBC’s brand value has grown 32 per cent year-on-year to a total of $47.8 billion. The brand value of China Construction Bank and Bank of China grew by 17 per cent and 13 per cent respectively. The fastest growing brand last year was also Chinese. Harbin Bank’s brand trebled in value over the course of 2016 to $811 million, the report said.

The rising prowess of Chinese banks and ICBC in particular comes at the expense of Wells Fargo, which has lost its position as the world’s most valuable banking brand, the report said. Wells Fargo has also been the architect of its own misfortune. Its fake accounts scandal, which broke last year, hit its reputation, with downgraded revenue forecasts contributing to a 6 per cent brand value fall to $41.6 billion.

Europe in the doghouse
The situation for Europe’s banks is worse still, the report said. The most valuable bank brands from the UK, France, Germany and Italy (HSBC, BNP Paribas, Deutsche Bank and Intesa Sanpaolo) have all declined in brand value. Deutsche was recently hit with a $7.2 billion bill to settle an investigation into its mortgage-backed securities (it was also hit this week with a fine for anti-money laundering control failings). Last year also saw a 97 per cent plunge in profits and an individual bonus freeze for all VPs and MDs at the lender. Deutsche’s brand value slid 41 per cent to $4.9 billion. (The Frankfurt-listed lender is due to issue full-year and quarterly results today.)

HSBC’s brand value declined by 5 per cent to $22.9 billion as it went through a period of consolidation. At the domestic level, over a quarter of its UK branches have been closed in the last two years. Internationally, HSBC’s Brazilian business was sold to Bradesco. HSBC’s marketing communications have shifted to reflect its more geographically concentrated approach. The “World’s Local Bank” message has been replaced with campaigns that focus more on HSBC’s role in facilitating personal and business ambitions.

Canada’s banks are an exception to the general Western trend. Royal Bank of Canada led the way with brand value growth of 28 per cent to $12.7 billion, but Toronto Dominion, Scotiabank, Bank of Montreal, CIBC and Desjardins have all posted double digit brand value growth.

Qatar National Bank is the Middle East and Africa’s most valuable bank brand. Net profit in 2016 was $3.4 billion, up 10 per cent from the previous year. QNB acquired Turkey’s fifth largest lender, Finansbank, with the subsequent rebrand contributing to overall brand value growth of 56 per cent to $3.82 billion.

Itaú is the most valuable banking brand in Latin America. The Brazilian real appreciated approximately 25 per cent in 2016 and the economy is rebounding after several difficult years. Itaú is clearly benefitting, with a brand value of $6.9 billion, almost double that of the previous year.

Sberbank, which ranked 24th globally, is Russia’s most valuable banking brand. Its brand value is $9.1 billion, after 33 per cent growth last year.