Managing Reputation in The Banking Industry (eBook)

STEFANO DELL’ATTI (stefano.dellatti@unifg.it) is a Professor of Banking and Finance at University of Foggia (Italy). He holds a PhD in Business Administration and Governance from the University Parthenope of Naples (Italy). He was an Assistant Professor in Banking and Finance at Faculty of Economics University of Foggia (from 1997 to 2000). From 2000 to 2003, he was an Associate Professor at University of Foggia. He is currently a Full Professor in Banking and Finance at University of Foggia (since 2003), where he teaches Banking and Finance and Strategy and Organization of Financial Intermediaries.He is a member of the Council of PhD in Management and Finance at University of Foggia and Director of the Research Center Interuniversity on the Guarantee Institutions (CeSAC) of University of Foggia and University of Bari “Aldo Moro”.He is also a Member of the Editorial Board of Journal “Rivista Bancaria” and “Banche e Banchieri”, and he was an editor and reviewer for a number of journals.Over his 20-year academic career, he has authored (or co-authored) more than 50 scientific publications and 5 books. His major areas of research are as follows: Value and Intangibles in Banks; Reputational Risk; Small Banks, Guarantee Institutions; Efficiency of Financial Intermediaries, Regulation and Disclosure.ANNARITA TROTTA (trotta@unicz.it) is a Professor of Banking and Finance at “Magna Græcia” University (UMG) of Catanzaro (Italy). She holds a PhD in Business Administration from the University Federico II of Naples (Italy), where she was an assistant Professor of Banking on the Faculty of Economics from 1995 to 2001. From 2001 to 2006, she was an Associate Professor at the University of Catanzaro. Since 2006, she has been a professor of Economics and Management of Financial Institutions and Markets at UMG, where she teaches Banking, Financial Markets, and Corporate Finance.She is currently a member of the PhD Council of the School of Theory of  Law and European Legal and Economic Systems at UMG and a member of the Evaluation Unit of the LUM Jean Monnet University (Italy).She is also a member of the Committee of Advisors of Ordines (for Interdisciplinary Research on European Institutions) and a member of the editorial boards of the following journals: “China – USA Business Review”, and “Economics World”.Over her 20-year academic career, Trotta has authored (or co-authored) more than 50 scientific publications and 4 books. Her primary areas of research are Social and Sustainable Finance; Impact Investing; Alternative Finance and Sustainability; Reputational risk and reputational crisis in the banking sector; Corporate Social Responsibility in the banking sector; Subprime crisis and Credit Rating Agencies; Local banking and information asymmetries; Credit risk; Small business, Venture Capital and Informal Venture Capital; Bank-small business relationships; and Finance and Medicine.

Preface 8
Acknowledgements 10
Contents 12
Part I: Theoretical Foundations 14
Reputation, Reputational Risk and Reputational Crisis in the Banking Industry: State of the Art and Concepts for Improvements 15
1 Corporate Reputation: Definitions and Main Concepts 15
2 Bank´s Reputation: Determinants and Consequences 18
3 Reputational Risk: Regulatory Approach and Management Connections 21
Box 1 ADR and the Reputational Sanctions: A Focus 23
3.1 The Management of Reputational Risk: The Point of View of Regulation 25
3.2 Reputational Risk in the System of Banking Risks 27
3.3 The Dynamics of Reputational Risk: Sources, Effects and Stakeholders Involved 28
4 Understanding Reputational Crisis in the Banking Industry: Concepts for Improvements and a Proposed Model 30
4.1 A Focus on Sections C and D 32
4.2 A Focus on Sections E and F 35
Appendix: A Model for Understanding Reputational Crisisa 36
References 39
Reputation, Reputational Crisis and Corporate Social Responsibility of Banks: Measurement and Relationships 45
1 Corporate Reputation and CSR: The Measurement Metrics 45
1.1 The Metrics for Measuring Corporate Reputation 46
1.2 The Quantitative Metrics for Measuring Corporate Reputation 46
1.3 The Qualitative Metrics for Measuring Corporate Reputation: Professional Models Versus Academic Models 47
1.4 The Qualitative Metrics for Measuring Corporate Reputation Proposed by the Doctrine 50
1.5 The Metrics for Measuring CSR 51
1.5.1 Ethical Ratings 51
1.5.2 Ethical Indexes 52
1.5.3 Other Measurement Approaches for CSR 53
1.6 The Measurement of Corporate Reputation and CSR: Can We Hypothesize an Integrated Approach? 54
2 Reputational Crisis and the Corporate Social Responsibility of Banks: What Are the Relationships? 55
2.1 Reputation and CSR: A ``Triple´´ Consequential Relationship 56
2.2 Reputation and CSR: A More Complex Relationship 59
2.3 CSR as a Reputational Driver: Characteristics and Effectiveness Conditions 60
Box 1 The Reputational Crisis of Société Générale and the Role of CSR 62
References 63
Part II: Learning from Case Studies 68
The Libor Case: A Focus on Barclays 69
1 Introduction: The Libor Rate-Fixing Scandal 69
2 A Focus on Barclays 72
3 The Reconfiguration of Internal and Qualitative Determinants of Reputational Risk: Corporate Social Responsibility, Corporat... 76
4 Quantitative Indicators, Credit Ratings and Share Price Analysis 81
5 Conclusions and Outlook 86
References 87
The Case Study of Goldman Sachs 89
1 Introduction 89
2 The Analysis of the Internal, Qualitative Determinants of Reputational Risk: Corporate Social Responsibility, Corporate Gove... 92
3 The Influence of the Administrative and Judicial Inquiries and Media on Rating and Reputation 95
4 The Analysis of Share Price and Quantitative Indicators 100
5 Conclusions 108
References 109
The Case Study of Lehman Brothers 110
1 Introduction 110
2 The Analysis of the Internal Qualitative Determinants of Reputational Risk: Corporate Social Responsibility, Corporate Gover... 111
3 The Influence of the Administrative and Judicial Inquiries and Media on Rating and Reputation 115
4 The Analysis of the Share Price and Quantitative Indicators 117
5 Conclusions 126
References 127
UniCredit and Reputation: A Journey Integrating Stakeholders´ Perceptions into Business Planning and Strategies 129
1 UniCredit Highlights 129
2 The Business Model 130
3 Reputation Assessment in UniCredit 132
4 Organisational Change 133
5 2009-2013: The Early Years-An Extraordinary Learning Path 134
6 The Survey Method 134
7 Building an Effective Call to Action 136
8 2014: The Paradigm Shift Driving a Clear-Cut Quantum Leap 137
9 Main Project Goals 138
9.1 Merging the Two Methods of Analysis: Model Selection 138
9.2 Questionnaire Redesign: Statistical Analysis and Qualitative Study 138
9.3 The UniCredit Ipsos Model 139
9.4 Core Metrics and Drivers 140
9.5 Main Goals of the Survey 140
9.6 Example of Measurements: Awareness 141
9.7 Example of Analysis 141
10 Future Projects and Developments 142
10.1 Background 142
10.2 Status Quo 143
10.3 Methodology 145
11 Foundation Research Project 145
11.1 The Impact of Twitter Conversations on UniCredit´s Reputation and Its Corporate Repercussions 145
11.1.1 Starting Point of the Project 145
11.1.2 Main Advantages of the Project 146
12 Conclusions 147
References 148
Intesa Sanpaolo: A Case Study on Reputation Management and Its Relationship to Corporate Social Responsibility 150
1 Company Profile 150
2 Reputation and Reputational Risk at ISP 153
2.1 Reputational Risk at ISP 153
2.2 Reputational Risk Management 154
2.3 Image and Reputation: How They Are ``Measured´´ at ISP 156
2.4 The Outcomes of Reputation Measurement 157
3 The Relationship Between Corporate Social Responsibility and Reputation: A Detailed Look 161
3.1 ISP´s Attention to Social and Environmental Issues 161
3.2 The Corporate Social Responsibility Function 162
3.3 The Code of Ethics 163
3.4 The Sustainability Report 164
3.5 The Materiality Matrix 165
4 Conclusions and Outlook 166
References 168
Part III: From Experience to Knowledge 169
Managing Reputation: Reflections and Operational Suggestions 170
1 Introduction 170
2 A Joint Vision of Reputational Crisis: Which Lessons Can Be Drawn? 171
3 The Manifestation of Reputational Crisis: Organizational and Managerial Implications 175
3.1 The Process of Reputational Crisis Management 176
3.2 The Organizational Aspects 182
4 Guidelines for Enhancing the Effectiveness of Bank Reputation Management 185
References 189