Investment banks are enacting plans to cope with the spread of coronavirus, which has seen ING split its trading operations in London and New York and a host of other firms prepare to work remotely at disaster recovery sites.
Citigroup kicked its business continuity plan for London into action on Thursday and is actively trading at its remote site in Lewisham, about seven miles from its Canary Wharf base, sources said. About 10% of its traders are at the site and will be kept separate from colleagues at the main trading site.
The threat of the spread of the virus was highlighted on the same day by rival HSBC, which said a member of its research department in its Canary Wharf headquarters had tested positive for coronavirus. He has self-isolated and colleagues on his floor and others who came into contact with him are working from home, and the building remains open.
Trading sites are of particular concern, as the need to conduct activity in a secure environment makes that hard to do remotely.
Hundreds of staff have already been sent to disaster recovery sites for a prolonged period or to make sure any kinks are worked out. Middle and back-office staff are also testing technology and compliance requirements if they work at home.
Firms have had disaster recovery sites and business continuity plans for years, particularly after the 2001 terror attacks in New York, but for many this is the first major test of them.
They are set up to allow trading to continue in the event of fire, terror attack, or other major disruption. A particular risk of coronavirus, however, is that it could spread quickly across the trading floor - prompting some to take action in advance to separate teams of traders.
Dutch bank ING on Monday separated its trading operations in London, Amsterdam, Frankfurt, New York and Manila to use remote facilities as well as the main trading floors. It had already split trading operations in Hong Kong and Singapore.
The move affected about 200 people globally in its financial markets and treasury divisions, a spokesman said, and that it was a precautionary move. "The idea is that these colleagues are not in contact with the others," he said.
Most banks have split trading operations in parts of Asia, but not yet implemented the same plans in Europe or the US. But they are ready to do so.
"It's a very fast moving situation and could change within two hours," a source at one major bank said.
Around London's suburbs, for example, continuity sites are being tested more seriously than ever before. In addition to Citi's Lewisham site, Morgan Stanley is testing its site near Heathrow Airport, BNP Paribas and Societe Generale are in Romford, Essex, and Barclays has readied its alternative venue in Northolt, west London, industry sources said.
“We have local and regional contingency plans in place and we have well-established business continuity plans for the firm. We will continue to monitor the situation and adjust our operations as necessary in order to provide the safest possible work environment for our colleagues,” Citi said.
Goldman Sachs has its disaster recovery site in Croydon, 15 minutes from central London. It sent teams of traders there on Thursday to ensure it is fit for purpose. Some sites are further afield: JP Morgan has one site on Victoria Embankment, a short hop from its London base, but its other back-up is in Basingstoke, 50 miles to the southwest.
In Spain BBVA has moved up to 100 traders from its Madrid HQ to its back-up site in the suburb of Las Rozas as part of its contingency planning for coronavirus. That represents a quarter of its Madrid traders.
In New York, banks have sites in New Jersey, Brooklyn and beyond as back ups for their Manhattan hubs.
In Asia, the split working arrangements between the office, back-up site and home is well in place. Anecdotally, about 50-70% of investment bank staff still seem to be in the office in Hong Kong, although that is higher in heavily regulated areas, such as trading.
WHAT IS ALLOWED?
Working from home is tougher for traders and salespeople than for staff in other areas of a bank, and regulators are keeping a close eye on the risk that poses.
Some exchanges require access via a designated terminal, usually office-based. Sales staff need to record client interactions, so firms need to be confident they can manage risks, record calls, and report and monitor trades. Firms also need to know they can protect their data, and their clients'.
"Trading floors are clearly a more controlled and effective environment than someone’s home office," an industry source said.
Connectivity away from the office can also be patchy, so firms need to test delays and latency issues.
AFME, which represents Europe's wholesale financial markets, said it was in talks with banks and regulators about what needs to be done to ensure markets are functioning and remain liquid if the virus outbreak escalates.
"There are regulatory oversight challenges associated with working from remote locations and firms will need to review their policies and procedures to ensure how best to comply with their regulatory obligations," AFME said.
The other challenge is that business continuity plans are often based on using other offices globally, which may not be possible with a global spread.
"BCPs typically rely on staff in other regions to provide cover for issues in a specific location, so current plans will need to be revisited," said Will Packard at technology and management consultancy Capco.
Bank staff away from trading floors have more flexibility to work from home. Technological advances in recent years have made that far more fluent, although for many firms the current situation is the biggest test of home working on a wide scale.
Some syndicate teams are rotating, with some bankers working from home and others in the office, to avoid contact with each other.
Most banks, including Citigroup, JP Morgan, HSBC and UBS, have implemented bans on all non-essential overseas travel. Others are operating a policy that blocks travel to affected areas, notably China, Hong Kong, South Korea, northern Italy and Iran, in line with government advice. Some firms are also asking staff to declare personal travel plans too.
(Additional reporting by Sudip Roy, Thomas Blott, Claire Ruckin, Helene Durand and Christopher Spink.)