Name game: UTI Bank turns Axis on royalty demand
UTI Bank has decided to stop piggybacking on the UTI brandname and has decided to carve a new identity for itself by rebranding itself as "Axis Bank". The rebranding follows a demand of royalty payment from UTI AMC over the brand use. The bank board which met on Monday also approved the appointment of PJ Nayak as the whole-time chairman of the bank with executive powers. Till now he was the chairman and managing director of the private sector bank.
While several private and public sector banks have gone in for a brand overhaul, this is the first time that a bank has dropped an established brand for an unknown name. According to UTI Bank ED Ashok Kumar: "
The bank had the right to use the brand name till January 31, 2008. Post that, we would have to pay royalty. However there was nothing firm on how much royalty had to be paid. We may have had to pay a high royalty. In order to end the uncertainty we decided to rebrand the bank." After the collapse of the erstwhile UTI, the investment in subsidiaries by the failed mutual fund was transferred to SUUTI — an arm of the government. A new entity UTI AMC inherited the brandname and most of the schemes. However, UTI AMC does not hold any significant shares in UTI Bank.
The bank has been a professionally-run organisation with Mr Nayak as CMD. For now, Mr Nayak, will continue to remain in the bank as its executive chairman. Although Mr Nayak had refused to accept a truncated chairman's or CEO post as advised by RBI the banks board has decided to retain him as chairman and keep the MD post vacant for now. According to Specified Undertaking of the Unit Trust of India's chairman SB Mathur, the board had considered a separate MD and will look for one as the bank grows. Mr Nayak could be among the only executive chairman in the private sector bank industry.
The UTI brand name can be used by entities promoted by the erstwhile UTI only until January 2008, with the licensing right vested with the asset management company. This is as per an agreement worked out by the government in 2005, when it transferred control of the AMC to four promoters — SBI, LIC, BoB and PNB. In order to use the brand name post 2008, the bank would have to pay royalty to the AMC.
On rebranding, the bank will spend Rs 20 crore on change of signages alone. It is also likely to spend around Rs 30 crore for the rebranding and marketing exercise. Last year the bank had spent around Rs 15 crore in marketing. A team of bank officials along with advertising agency O&M worked on the new brand. The brief was to create a new brand that is simple and signifies stability. Also with the bank starting off on its international foray, the name should have worldwide appeal and was modern and also simple. The bank scrip moved up by 2.7% in the BSE to close at Rs 467.85.
The bank will also rebrand its two subsidiaries UBL Asset Management the AMC vehicle which was launched by the bank and UBL Sales — a marketing subsidiary which was established for marketing and retail services. These subsidiaries would now be rebranded as ABL Asset Management and ABL Sales.
The bank will soon finalise a new logo based on the new name. Incidentally, with the new rebranding when banks are arranged in alphabetical order Axis Bank would be among the top few banks against UTI Bank where it was among the last three.
In recent years, banks have used different models to position their image. Yes Bank which was launched in August 2004 had a muted but an effective brand campaign. In fact the bank is said to have spend only a couple of crores. ICICI Bank had used Amitabh Bachchan as its brand ambassador when it wanted to make an impact in the retail space.
The bank had approximately spend Rs 10 crore only on Mr Bachchan. A host of other foreign banks like Deutsche Bank and Barclays have also been major spenders in recent times as they went retail. UTI Bank which has 561 branches in 342 cities and towns may also have to go in for a massive ad campaign
While several private and public sector banks have gone in for a brand overhaul, this is the first time that a bank has dropped an established brand for an unknown name. According to UTI Bank ED Ashok Kumar: "
The bank had the right to use the brand name till January 31, 2008. Post that, we would have to pay royalty. However there was nothing firm on how much royalty had to be paid. We may have had to pay a high royalty. In order to end the uncertainty we decided to rebrand the bank." After the collapse of the erstwhile UTI, the investment in subsidiaries by the failed mutual fund was transferred to SUUTI — an arm of the government. A new entity UTI AMC inherited the brandname and most of the schemes. However, UTI AMC does not hold any significant shares in UTI Bank.
The bank has been a professionally-run organisation with Mr Nayak as CMD. For now, Mr Nayak, will continue to remain in the bank as its executive chairman. Although Mr Nayak had refused to accept a truncated chairman's or CEO post as advised by RBI the banks board has decided to retain him as chairman and keep the MD post vacant for now. According to Specified Undertaking of the Unit Trust of India's chairman SB Mathur, the board had considered a separate MD and will look for one as the bank grows. Mr Nayak could be among the only executive chairman in the private sector bank industry.
The UTI brand name can be used by entities promoted by the erstwhile UTI only until January 2008, with the licensing right vested with the asset management company. This is as per an agreement worked out by the government in 2005, when it transferred control of the AMC to four promoters — SBI, LIC, BoB and PNB. In order to use the brand name post 2008, the bank would have to pay royalty to the AMC.
On rebranding, the bank will spend Rs 20 crore on change of signages alone. It is also likely to spend around Rs 30 crore for the rebranding and marketing exercise. Last year the bank had spent around Rs 15 crore in marketing. A team of bank officials along with advertising agency O&M worked on the new brand. The brief was to create a new brand that is simple and signifies stability. Also with the bank starting off on its international foray, the name should have worldwide appeal and was modern and also simple. The bank scrip moved up by 2.7% in the BSE to close at Rs 467.85.
The bank will also rebrand its two subsidiaries UBL Asset Management the AMC vehicle which was launched by the bank and UBL Sales — a marketing subsidiary which was established for marketing and retail services. These subsidiaries would now be rebranded as ABL Asset Management and ABL Sales.
The bank will soon finalise a new logo based on the new name. Incidentally, with the new rebranding when banks are arranged in alphabetical order Axis Bank would be among the top few banks against UTI Bank where it was among the last three.
In recent years, banks have used different models to position their image. Yes Bank which was launched in August 2004 had a muted but an effective brand campaign. In fact the bank is said to have spend only a couple of crores. ICICI Bank had used Amitabh Bachchan as its brand ambassador when it wanted to make an impact in the retail space.
The bank had approximately spend Rs 10 crore only on Mr Bachchan. A host of other foreign banks like Deutsche Bank and Barclays have also been major spenders in recent times as they went retail. UTI Bank which has 561 branches in 342 cities and towns may also have to go in for a massive ad campaign
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