The following article is the first in a series of weekly updates aiming to provide clear guidance and direction to businesses in unprecedented uncertainty and in particular, against the ever-evolving menace that is COVID-19.
Since the beginning of March, London and its financial institutions have been at the forefront of the battle against the virus in the United Kingdom. As the number of positive cases confirmed in the capital began to grow, so too did banks measures to pre-emptively stress test their respective business continuity and contingency plans. The U.K’s largest banks have since been splitting teams, dividing offices to mitigate the potential effects of isolation as well as enlisting back up locations and mandating home working wherever possible.
The measures have proved to be prudent in light of the unprecedented socially restrictive measures that have been announced and implemented by the government in recent days. They have coincided with a similarly unprecedented financial support package by the Chancellor of £330bn announced on Tuesday. The Financial Conduct Authority similarly released new guidance on responding to difficulties that consumers and businesses alike will face during the duration of the COVID-19 turbulence. The regulatory told banks to take a pragmatic approach to loans, mortgages and penalty fees and to ‘provide support as consumers and small businesses face challenges at this time’.
The interest rate cut by the Bank of England will incur direct consequences on the day-to-day services of the banking sector and how they will be required to manage the impacts felt in the wider economy over the coming weeks. In light of the aforementioned developments, an overview of how the virus has affected the banks so far, their responses and the measures taken to support clients can be found below.
NatWest Group/RBS had been the most proactive of the major U.K banks in announcing its plans to support customers in the wake of the increased emergency measures to cope with the spread of the virus. A full suite of measures to support customers throughout the pandemic has been launched, including an initial announcement in pledging £5bn working capital for SMEs with loan repayment holidays and temporary emergency loans with no fees.
Reports by City A.M came through last week noted the effects that COVID-19 will have on annual AGMs, with a physical AGM likely to be restricted only to core RBS attendees behind closed doors in Edinburgh, with shareholders and non-core participants joining via VideoLink. Alison Rose reemphasised the group’s strong capital position ahead of the scenarios that may unfold in the coming weeks and months.
Lloyds CEO, Antonio Horta-Osario has been the most vocal of the heads of the respective institutions warning the severe repercussions that will adversely affect the bank, who are already under pressure to perform on the back underperforming financial results for 2019. To that effect, Lloyds have announced that they will postpone a £3bn investment in its technology investment programme to maintain adequate capital levels through the outbreak.
Domestically, Lloyds Bank confirmed that their Citymark office in Edinburgh would be closing after a member of staff tested positive for COVID-19 on Friday. The office is to undergo a comprehensive deep clean and all staff within the group have have been told to self isolate. Lloyds have so far announced a £2bn fund for small businesses impacted.
From both a colleague and business continuity perspective, Santander has not made any major announcements regarding staff or business continuity impacts of COVID-19 in the United Kingdom. The executive Chairman of the group’s Spanish operations Ana Botin however remains relatively optimistic, predicting only a 5% fall in fee earnings with no major impact on capital or medium term targets.
HSBC was the first major financial institution evacuated a section of their Canary Wharf office following a confirmed positive Coronavirus case within the investment research department on March 5th. This was followed on March 13th where it was confirmed an employee within the bank had been a confirmed case in Dubai, leading to staff within its global markets division being sent home to self isolate. Like RBS, HSBC committed £5 billion to support businesses through the economic turbulence as a result of COVID-19.
Barclays confirmed that one of its employees within its investment banking division. In a statement, the bank noted that ‘the colleague has been in self-quarantine since 9th March following notification of their potential exposure to the virus’. The building and the floor were kept open however.
For clients – broad measures were released on Tuesday for personal, business and corporate banking customers pointing to a £14 billion lending fund, already in place since 2019 as part of a three year commitment to help SMEs build resilience during uncertain times.
It is pertinent to reiterate that the situation in the United Kingdom is ever-changing, that the information within the article remains factually accurate as at date of publication and that readers should follow advice released on the gov.uk website wherever possible as well as the government’s daily bulletins.
If you have been adversely affected by the outbreak so far and require additional support in the management, please do get in contact. PryceWilliams offers bespoke crisis management consultancy packages to support businesses to ensure business continuity and operational readiness across the financial services industry.