Brand health check: Banking on a recovery

The JPMorgan situation reaffirms yet again that reputation is your most valuable asset.

Let’s consider a different starting point, which is to put the actual trading loss into perspective: JPMorgan made roughly $39 billion in pure profit last year and nearly $10 billion in the first quarter of 2012.

You do not achieve that kind of spectacular profit without a degree of risk. In some respects, one could argue the trading loss – the cause of all this “fuss” – is small compared with the bank’s recent profit performance. To mix metaphors, you could argue that corner, but you’d be barking up the wrong tree. The actual portfolio loss pales in significance when considering the tangible impact on the company’s reputation and financial position. The initial US$2 billion loss quickly sliced US$14 billion off JPMorgan’s market cap. Many billions have been burned and people have lost their jobs, some rightly so. The loss will cost much more, in terms of JPM’s valuation, customer confidence and the wider public perception, as well as the very real likelihood of tougher legislative or regulatory restrictions.

Which only goes to prove that the record is still in the groove: “Reputation is your most valuable asset.”

treatment

Rylance’s remedy:

• Full disclosure, acknowledgement of the problems, acceptance of fault and commitments going forward.

• High marks for Jamie Dimon’s visibility and accountability.

• Restore trust over time, tangible action and a transparent rapport.

Bill Rylance, Founder and CEO, Watatawa

JPMorgan’s predicament is not unique. In recent times, financial institutions have had to operate in this increasingly hostile reputation environment where every issue, every reported loss, and every inquiry is connected in the minds of the public to a broader general narrative that assumes conspiracy at worst and big business collusion at best. The key for brands such as JPMorgan is to understand the drivers of corporate reputation and the relevance of its internal corporate culture and external business conduct. When a loss of this magnitude becomes known to the public, an organisation’s leadership needs to take matters into its own hands and address the situation with an authentic and factual response in a structured and consistent way. Many commentators pointed out there was nothing wrong with a business that typically reports large profits posting a loss from time to time: that is the nature of markets. The absence of context and perhaps detail made this about more than the loss itself. It became again about the culture and practice of the financial sector. The pathway to re-establishing trust is ongoing, and post-issue it should over-emphasise the essential building blocks.

Robertson’s relief:

• Understand the drivers of corporate reputation.

• Separate from the crowd and emphasise leadership, corporate culture and communication.

• Address the situation with an authentic and factual response.

Stephen Robertson, Director, Southeast Asia Edelman