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Blemished Citigroup Brand Needs Makeover

Citigroup's (C) greatest challenge may not be reviving its business, but redeeming its brand.

The company's famous arc logo these days looks less like a "modern symbol connecting clients' desires and aspirations" to Citi, as its designer intended, than a sign of the financial giant's downward-curving trajectory.

The fundamental problem with Citi's brand is that it represents a business model -- the financial "supermarket" -- that is heavily identified with the financial crisis. Combining commercial banking, brokerage, insurance and other businesses in a single mammoth enterprise may still appeal to some investors. For just about everyone else, including a growing chorus of lawmakers and economists, it's a major source of concern.

When Citi refashioned its corporate identity in 2007, it unified its products and services under what's known as a "master brand." Out was "Travelers" and "Salomon Brothers," the insurance and brokerage firms that Citicorp (as it was then called) had acquired in the companies' landmark 1998 merger. In came "Citi," a sleek corporate wrapper for the financial titan's many businesses.

Other diverse companies, notably General Electric (GE), have had success with a master brand. "The problem is that when the brand takes a hit, so does the entire organization," says independent branding consultant Jill Hamilton-Brice in an interview. And "in a space like financial services, it's very difficult to be all things to all people. That 'one size fits all' approach doesn't work."

Especially when those people don't trust you, or, to be fair, the industry as a whole. But for Citi more than most financial players, the banking bust splashed mud over the entire company, even those parts of the business that are doing fine.

Landor Associates, the San Francisco consulting firm that developed Citi's new image, maintains that the financial company's brand strength "has held up remarkably well, despite the global economic upheaval...."

Not really. Citi this year has tumbled from No. 19 to No. 36 on a list of best global brands, according to market research firm Interbrand. In 2007, Citi came in at No. 11, making it the top-ranking financial firm. By contrast, Goldman Sachs (GS) held on to its ranking in 2009 despite cementing a long-standing reputation for unbridled greed. To be greedy is forgivable, apparently; to be greedy and inept, not so much.

Says Interbrand:

No longer considered a leader in financial services, Citi is in survival mode, selling off several businesses in an effort to streamline operations and focus on core competencies. . . . Citi's troubles have been highly publicized, and recent moves to increase transparency and overhaul its upper management may not prove sufficient to rebuild customers' trust.
Rebuilding that trust will be no small feat, given the level of public hostility toward Wall Street. Yet for better or for worse, the clouds have started to lift over rivals such as Bank of America (BAC) and Wells Fargo (WFC).

Not so with Citi. Even the company's efforts to patch up its reputation are falling flat. CEO Vikram Pandit was no doubt hoping for a lift from the company's recent move to repay its TARP loan. But that backfired when Citi's largest shareholder, the U.S. Treasury, postponed selling its stake because of the banking company's anemic stock price.

The financial giant is also in a humiliating spat with another large investor, the formerly bullish Abu Dhabi Investment Authorithy. With Citi shares tanking, the sovereign wealth fund wants to end a 2007 agreement to buy $7.5 billion in stock over the next two years, alleging that the company misrepresented the deal.

As my colleague Geoffrey James notes, Citi also won no plaudits this year for spending $400 million to plop its name and logo onto the new home in Queens for the New York Mets. First of all, no one besides the natives likes the Amazins'. More seriously, the move came shortly after Citi secured a king-size loan from taxpayers. Steee-riiiike!

Such gaffes suggest a company suddenly unsure of its place in the world. Is Citi about peanuts and Crackerjack, as its dive into subprime mortgages suggests? Is it a plaything for the world's wealthiest investors? Must it -- can it -- be both? Or do such interests collide near the intersection of Main and Wall? Can a company transform its brand without transforming its business?

Sure, Pandit's not entirely, or perhaps even chiefly, to blame. He inherited an unholy mess from previous chief Charles Prince, who led the company into the real estate muck.

But whatever his alibi, Pandit doesn't appear to have the answers. Under his watch, the company's brand continues to weaken. One place to start might be with another element of Citi's corporate identity -- its slogan: "Citi never sleeps." Do tell.

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