Banking Review

Communication starts with your community

In a week where fear and irrationality were blamed for wiping billions of dollars off the value of some of our biggest financial stocks, I think local institutions have performed just as poorly on the communications front.

Early last week it was already becoming clear HBOS was facing significant issues as a result of the failure of Lehman Bros. Panic was setting in. The timing was perfect for Lloyds TSB to swoop, and swoop it did, snapping up its giant rival for 12.2 billion pounds.

And yet it took HBOS Australian subsidiary BankWest until 6.30pm Thursday to issue a media statement arguing the deal would be good for its customers.

I learnt of the proposed acquisition of HBOS by Lloyds TSB on a blog – well before the mainstream press took hold of the story, and here in Australia one customer asked his Twitter followers whether he should withdraw his “substantial savings” from BankWest.

There are several emerging ways for corporates to monitor what’s being said about them, including Plugger, which not only tracks mainstream news, but also blog and Twitter messages.

Australian bankers may feel they are “light years” away from the woes of UK and US banks, but perception is nine tenths reality, as has been proven by our local share market wobbles.

In this environment communication is critical. A lack of communication simply encourages fear and speculation.

Last week saw a handful of overseas companies embrace new communication methods to help downplay market fears, including Wachovia which issued this statement, and announced it via Twitter.

Wesabe was another player to act fast when it called the FDIC (not that they were listening) to kick off a discussion about what happens to depositers’ money in the event of a bank failure.

It’s a shame our local banks didn’t follow their lead.