Investment banks are enacting plans to cope with the spread of the coronavirus, with JP Morgan, Citigroup and ING splitting trading operations and a host of other firms preparing for employees to work remotely at disaster recovery sites in New York and London.
Citigroup is actively trading at its remote site in Lewisham, about seven miles from its Canary Wharf base in London's financial district, sources said. About 10% of its traders are at the back-up site and will be kept separate from colleagues at the main trading site, the sources told IFR. Citigroup said it was monitoring the situation and would adjust its operations as necessary.
JP Morgan is moving traders in New York and London to remote locations, where they will stay until further notice, it said in a memo to sales and trading staff. A source said the biggest waves of moves will be on Monday. Its back-up sites include Basingstoke, 50 miles to the southwest of London.
JP Morgan also extended its ban on non-critical international travel to domestic travel, affecting all its global locations. Most major banks have now banned international travel.
Worries about the spread of the virus escalated on Thursday when HSBC said a member of its research department in its Canary Wharf headquarters tested positive for coronavirus. He has self-isolated and the bank sent about 100 staff home. Its building remained open.
Trading sites are a particular concern for banks and regulators, as the need to conduct activity in a secure environment makes that hard to do remotely. As a result, banks have been trying to make sure any kinks are worked out.
ING was the first major bank to separate its trading operations in Europe, when it started using remote facilities in London, Amsterdam, Frankfurt, New York and Manila on Monday as well as its 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. He said it was a precautionary move: "The idea is that these colleagues are not in contact with the others."
In Madrid, BBVA moved about 100 traders - or a quarter of its trading floor there - to its back-up site in the suburb of Las Rozas as part of its contingency planning for the coronavirus.
IN THE SUBURBS
Most banks have split trading operations in Asia between the office, back-up sites and home.
Anecdotally, about 50%-70% of investment bank staff in Hong Kong still seem to be in the office, mostly working in split teams. It is higher in heavily regulated areas, such as trading.
Around London's suburbs, in addition to Citigroup's Lewisham site, Morgan Stanley is testing its site near Heathrow Airport, BNP Paribas and Societe Generale are doing the same in Romford, Essex, and Barclays has readied its alternative venue in Northolt, west London, industry sources 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.
In New York, banks have sites in New Jersey, Brooklyn and beyond as back-ups for their Manhattan hubs.
In Hong Kong, recovery sites are located in some of the city's less upmarket districts, including Chai Wan and Tai Po.
WHAT IS ALLOWED?
Banks 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 such sites.
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.
The Hong Kong Monetary Authority has been flexible in allowing traders to work from home where possible, sources said.
Still, 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. Banks also need to know they can protect their - and their clients' - data.
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.
Another challenge is that business continuity plans are often based on using other offices globally, which may not be possible with a global spread of the disease.
"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.
MISSING "HOOTS"
Bankers who are not on trading floors have more flexibility to work from home, helped by technological advances in recent years.
But roadshows for deals are being cancelled, or are being conducted via videoconferencing. In Hong Kong, two issuers have been marketing IPOs online, which could become standard practice if the outbreak lasts for months.
Some syndicate teams are rotating, with some bankers working from home and others in the office, to avoid contact with each other.
That can cause difficulties, however. One syndicate banker said in the office a "hoot button" is sounded when there is an update on a deal to alert salespeople, but that's hard to replicate when everyone is working remotely.