Off message: Sex, drugs and rock and roll…
Our new column seeks the truth behind the PR spin in the world of banking. This month: how Jefferies put itself on the front pages, and why Barclays’ timing is always off.
It has certainly been an interesting couple of weeks for the investment bank Jefferies.
Of all the crises that a bank communications team has to manage, the ones that are the most daunting are those that involve highly personal matters, often of a lurid nature, centering on an individual banker.
They’re daunting for a variety of reasons.
First, these stories move from the financial pages to the front pages and gain a momentum all their own.
Secondly, they are by nature very difficult to address. Although the personal conduct of a banker reflects directly on the institution he works for, it is structurally very tricky to comment, either on or off the record, on a banker’s personal life.
Thirdly, and perhaps most importantly, they bring bank PRs into the world of tabloid journalists – a world these PRs are not usually familiar with. It’s one thing to face off with financial writers over trading losses or bad loans; it’s quite another to be defending your institution to writers you have no familiarity with. And worse yet, red-top scribblers’ only familiarity with banking is from recently watching “The Wolf of Wall Street”.
In Jefferies case, the headlines started when Christina Kelly, wife of the head of Jefferies’ healthcare team, Sage Kelly, accused her husband and numerous other Jefferies bankers of abusing cocaine. What made the allegations even more startling was the accusation that Sage and his wife once engaged in sex with a client and his girlfriend.
Christina Kelly has since apologized to Jefferies, saying much of what had appeared in the press was “inaccurate, untrue, or hyperbolic”.
Nonetheless, the damage has been done. Jefferies, always regarded as an aggressive firm, will have to learn to live with the fallout from these kinds of headlines.
And what was the firm’s communications approach to events?
It would appear the Jefferies PR team kept its head under the covers in the earliest days of the scandal – probably not a bad approach given the salacious nature of what was appearing.
It then went on the front foot when CEO Richard Handler decided to post a statement on the company’s website from himself and Brian Friedman, executive committee chairman. The statement indicated that Handler, Friedman, senior Jefferies bankers named in Christina’s accusations and members of the healthcare team all voluntarily underwent and passed drug tests. The relevance of sharing that information isn’t immediately clear, but it must have made Handler feel like he was doing something.
The statement was also notable for another reason. It accused competitors of intentionally feeding information to the press to keep the scandal in the news. It is rather naive of Handler to believe such a thing wouldn’t happen, but again he probably felt good getting his retort into the public domain.
The irony of all this is that, in the long run, the damage to Jefferies’ brand equity will probably be negligible. Clients have never seen investment banks as paragons of virtue. Delivering good ideas, market-driven prices and crisp execution is what clients judge a firm by. Jefferies will move through this and, I would suggest, rather quickly.
Barclays' bad timing
Someone needs to talk to Barclays about its sense of timing.
Two years ago, it was the first of the UK banks to come forward to accept culpability in fixing the Libor rate. Whoever promoted that first-mover concept must now regret it deeply, considering it set off a chain reaction that saw Barclays chief executive Bob Diamond lose his job and led ultimately to the shrinking of the investment bank platform.
Now Barclays has decided to go in the opposite direction when it comes to the more than $3 billion in fines handed down against five banks by UK and US regulators for impropriety in FX trading.
So while Citibank, HSBC, JPMorgan Chase, RBS and UBS all huddled together and took their respective medicines, Barclays decided to go it alone for reasons that it has yet to explain.
Barclays has missed its chance at having any fines deeply discounted; from a PR perspective it has allowed for more negative headlines about its FX trading practices.
There are times when, if you have to decide between moving first, moving last or running with the pack, it might be better to run with the pack.
Off message is written by a senior adviser to the financial PR industry