Abstract

The case discusses the crisis communication strategies at India-based financial banking institution, ICICI Bank Ltd. (ICICI Bank). On September 15, 2008, the announcement of US-based investment banking major Lehman Brothers that it was closing down due to its exposure to subprime mortgage loans had a huge impact on ICICI Bank. Soon after, on September 16, 2008, Chanda Kochhar (Kochhar), MD and CEO, ICICI Bank, issued a press statement stating that the bank’s UK subsidiary had just a 1 percent exposure to Lehman Brothers and hence the bank did not face any liquidity crisis. While industry watchers felt that it was an aggressive response by ICICI Bank to come out into the open and accept its exposure to the crisis, the move backfired since there was huge media coverage showing ICICI Bank’s exposure to the crisis and reports saying that the top management had sold their shares and the bank could face a huge liquidity crisis. By late evening as the word spread, customers across all the states in India flocked to Automated Teller Machines (ATMs) and stood in long queues to withdraw their money. Subsequently, ICICI Bank’s stock was also downgraded. After issuing press statements related to ICICI Bank’s sound financial position, the bank sent messages to its customers saying that their deposits were safe with the bank and that the rumors related to its liquidity position were ‘baseless and malicious’. While some of the customers believed the bank’s statement and returned without withdrawing their deposits, others continued to stand in long queues at banks as well as ATMs to withdraw their money. Despite the bank’s reassurance to customers, some customers still continued to visit the branches. ICICI Bank then requested the financial ministry to intervene. Subsequently, the Finance Ministry and the Reserve Bank of India (RBI) intervened and assured customers and investors about the bank’s sound financial status. To instill confidence among consumers, in December 2008, ICICI Bank launched the ‘Power of Belief’ campaign through the bank’s website and other media channels. ICICI Bank’s several crisis communication initiatives were successful since it helped in restoring confidence among consumers as most of the consumers went back without drawing their deposits. Subsequently, the bank’s fall in stock prices also subsided. Experts commended ICICI Bank for effectively handing the crisis through communication with customers and investors, saying it was this that had helped restore confidence among customers.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Critically analyze crisis communication strategies at ICICI Bank.
• Understand the issues and challenges faced by the bank while communicating with its customers during the crisis.
• Understand the need to have a crisis communication plan at the organizations to handle crisis situations effectively.

Keywords

ICICI Bank, Lehman Brothers, ICICI Bank UK, Crisis communication, Communication strategy , Brand value, Brand communication, Brand strategy,Brand image, Print media,Television campaigns, Power of Belief’ campaign, Public relations, Global financial crisis, Chapter 11 bankruptcy, Liquidity crisis, Subprime mortgage crisis, Investment banks, Finance Ministry, Reserve Bank of India, Securities and Exchange Board of India