Global bankers reinventing dealmaking basics amid coronavirus outbreak

A logo sits on display in front of the Deutsche Bank AG headquarters at dawn in Frankfurt, Germany. Photographer: Ralph Orlowski/Bloomberg

It sounds like advice for averting Wall Street deals: Don’t travel. Don’t meet clients. Don’t even shake hands.

Yet those instructions are now flowing through the global financial industry as the coronavirus spreads. On a growing number of continents, banking and investing professionals are preparing for the possibility they will soon be working from home. Industry conferences for drumming up business are thinning out, moving online or facing cancellation. Sales of some new securities are sputtering.

Behind the scenes, bank leaders are dusting off regulatory plans for keeping “critical operations” open through a potential pandemic. Some describe things like how far apart to move traders along desks, or how many may work remotely. Bank branches may be able to keep their counters open, thanks to the bulletproof glass meant to stop robberies.

Financial firms that normally take pride in touching industries around the world are realizing they will be on all the front lines if governments fail to contain the virus. As outbreaks worsen in parts of Asia and pop up across Europe, bankers from top financial hubs to midsize cities are trying to reinvent on the fly how they’ll do business, anticipate how central banks may react, and assess their clients’ preparedness and potential needs.

“I’ve spent the last two days in front of customers and I’ve gotten 10 different views on what’s gonna happen — from ‘buckle down, this is gonna be a six-month period of time’ to ‘this is an overreaction,’” said Ted Swimmer, head of capital markets at Citizens Bank. “I just don’t think there’s a playbook for what these things are.”

Attendees at a derivatives conference in Frankfurt where Deutsche Bank AG Chief Financial Officer James von Moltke spoke had their body temperature measured by an infrared camera to check for symptoms. The organizers, a unit of Deutsche Boerse AG, noted that guests who traveled from China are obliged to respect a two-week quarantine

Venture capitalists are also taking precautions. Sequoia Capital elected to relocate an annual meeting that had been planned for New Delhi, said a person familiar with the matter. The new locale is in Half Moon Bay, California, about a 30-minute drive from the firm’s headquarters. The change was previously reported by the Wall Street Journal. Andreessen Horowitz, another top VC firm in Silicon Valley, recently posted a sign at its offices discouraging handshakes, citing the virus.

Of course, executives working in Europe and the U.S. are just now confronting a situation that took shape in cities around China almost a month ago. In hubs like Hong Kong, denizens of the financial industry are all too familiar with working from home while their kids pass time in the background.

Dark humor

Now, in a growing number of countries across Asia, firms are banning non-essential travel and starting to take more drastic measures. In South Korea, where authorities are trying to contain the largest outbreak outside China, banks including UBS Group AG and Citigroup Inc. have begun to split workers among different locations to ensure business can continue.

Precautions are also mounting in Europe. Commercial real estate firm Cushman & Wakefield said Wednesday that it decided to sit out the prominent MIPIM real estate conference in the French resort town of Cannes next month over safety concerns tied to the virus. Meanwhile in Berlin, the world’s largest private equity and venture capital conference continued this week as a somewhat muted affair, rife with dark humor and hand sanitizer. A few big names never showed, and neither did some attendees from Italy, the continent’s worst-hit country.

In fact, a growing number of banks have banned travel to certain Italian cities including the financial hub of Milan. Goldman Sachs Group Inc., Deutsche Bank, Credit Suisse, UBS and Morgan Stanley are among those enacting at least some limits on travel in the country or encouraging employees to postpone visits.

Banco BPM SpA, Italy’s third-largest bank, canceled its plan to unveil its new 3-year strategy in Milan on March 3 at the bank’s headquarters close to the city’s Cathedral square, according to people with knowledge of the matter. CEO Giuseppe Castagna will only host a video webcast and a conference call to avoid a large gathering of analysts and press in line with guidelines set by local officials and the company. The executive also canceled his roadshow in London, and arranged instead remote meetings from his office with investors, according to the people.

U.S. regulators require banks to have a pandemic plan that allows them to keep critical operations going even if a large number of employees fall ill or have to care for family members. Regulators warn that a severe pandemic could lead to as much as 40% of staff being absent and that outbreaks can come in multiple waves that last months.

Across the industry, firms are signaling that the virus has the potential to create significant disruptions in the coming year. Global behemoth Citigroup, merger advisory shop Evercore Inc. and private-equity giant KKR & Co. all mentioned the virus as a risk in annual regulatory filings this month.

Standard Chartered Plc, the U.K. bank that gets the majority of its earnings from Asia, said Thursday the virus will erode revenue growth in 2020, and that it will no longer meet a key profitability goal for next year.

Silver linings

Already, key financial-industry businesses are taking hits. Debt issuance in the $2.6 trillion international bond market, a key source of income for investment banks, came to a virtual standstill Wednesday as Wall Street faced its third straight day without any high-grade bond offerings and Europe’s bankers had their first day of 2020 without a deal.

The silver linings aren’t that bright.

Asked this week what the coronavirus might mean for FTI Consulting Inc., Chief Executive Officer Steven Gunby told analysts that “nobody knows” how it will play out but that the most important thing now is to check in with employees in affected regions and ensure they are ready.

Still, he added, “given the strong bankruptcy practice we have, if the economy had a downturn, we’ve got some parts of our business that would go up.”

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.