ANALYSIS: Banks invest in PR to boost City ratings

Investment banking has always been a cut-throat business but US and European expansion in the sector has created an urgent demand for top- level PR advisers

Investment banking has always been a cut-throat business but US and

European expansion in the sector has created an urgent demand for top-

level PR advisers

Last week PR Week reported that three top US investment banks are on the

hunt for leading executives to head their European PR operations.

This could just be coincidence, a periodic shake-up of top PR positions.

But more likely, it is illustrative of some interesting developments in

the sector. A closer examination reveals a soaring demand for high

calibre corporate communicators in the Square Mile. It also suggests a

difficulty in recruiting the required talent and the daunting nature of

some of these posts.

The investment banking sector is now even more competitive -

characterised by recent US expansionism, Euro-merger mania and some

damaging scandals.

Over the past three years ‘bulge bracket’ names from Wall Street such as

Goldman Sachs, Morgan Stanley and Lehman Brothers have become better

established in Europe. Corporate profiles have been raised and media

curiosity stimulated as these firms have targeted new geographical

markets, particularly in Eastern Europe, with London as their base.

Expansion has created a need for fresh marketing strategies and

presented an opportunity for profile- building from scratch.

Lehman Brothers, part of American Express until 1994, appointed John

Godfrey as head of European corporate communications in November last

year. He says a ‘major part’ of his role is to develop these new markets

and the company’s independent identity.

US giants are not alone in their hunger for growth. Leading European

banks, dissatisfied with their domestic returns, have recognised the

need to be more international and moved into London’s investment banking

centre, often by aggressive acquisition.

In 1995, German banks Dresdner and Deutsche Bank took over British

investment banks Kleinwort Benson and Morgan Grenfell respectively.

Swiss Bank Corporation’s high-profile acquisition of SG Warburg in May

last year highlighted the challenges faced by the new conglomerates in

terms of cultural integration. Consolidating firms may be forced to

rethink corporate identity and carefully consider internal

communications policies.

As if this wasn’t enough, there have been a number of scandals in the

industry that have needed some careful communications strategies.

Goldman Sachs was forced to gear up its PR support in 1991 to handle

media probing into its involvement in the Maxwell pension funds affair.

The Barings disaster speaks for itself and, more recently, Morgan

Stanley faced heavy criticism for controversial investments in


These developments should also be viewed in the context of a new breed

of financial journalist, the growth of financial newswire services and

an expanding portfolio of national and trade publications covering the

sector. As the volume of work grows and the media pack bays at the door,

senior banking management may feel exposed and look to a silver-tongued

media strategist to ease their fears.

‘London’s investment banks have lagged behind the US in their

appreciation of PR value,’ says Paul Downes, chief executive of

financial PR consultancy Merlin. ‘The US has been quicker to recognise

that professional presentation of a bank’s public face can have a big

impact on the bottom line.’

Downes adds: ‘The City is waking up to the need for planned

communications. It has always recognised the value of publicising its

successes but many firms could be accused of inertia and arrogance in

lacking an ongoing dialogue with the media.’

The new interest in senior communications personnel is good news for the

PR industry but despite the six-figure salaries on offer, the appeal may

be limited.

‘Such jobs are intensely political, more so than the equivalent position

in a FTSE company,’ says John Jay, business editor of the Sunday Times.

‘Investment banking is a people business and one may have to deal with

individuals that are highly incentivised.’

It’s a sector characterised by big deals and big egos, high pressure and

short fuses. It is perhaps significant that few people from the banks

were willing to talk on the record for fear of being seen to be trying

to raise their own profile. The senior PR person will have to be tough

to deal with financiers and journalists alike. ‘There are relatively few

people around who are able to deal with financial journalists and have

credibility with merchant bankers, who are themselves used to dealing at

the highest levels in client organisations,’ says Simon Brocklebank-

Fowler, MD of Citigate Corporate.

This could be one reason why the banks have recently tempted a number of

City journalists into financial PR. November saw Daily Telegraph City

diarist Damien McCrystal and the Independent’s Simon Pincombe join UBS.

Peter Krijgsman, formerly with the Evening Standard, has joined US firm

Merrill Lynch.

But there are positive implications for consultancies with a investment

banking track record. Agencies guide banking bigwigs through the denser

media jungle and help develop their new corporate images. They may also

play a vital role in supporting the newly-appointed individuals while

they find their feet.

This year has already seen the Amalgamated Bank of South Africa appoint

Shandwick Consultants and German-owned West Merchant Bank sign up

Citigate for a six-figure campaign.

Six figures could also be the size of annual wage packets if PR

practitioners choose in-house jobs well. But while salaries are high and

the positions challenging, there might be no more free lunches.

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