It is traditional for this foreword to say something along the lines of “Blimey, what a year that was”. But come on, what a year THAT was.
More than two million dead, hospitals overwhelmed, the world economy shut down. The enormity of the crisis is still hard to take in.
This time round, rather than being the cause of (or at least central to) the crisis – as was the case in 2008 – the banking and financing industry was key to the ongoing recovery.
The sheer size and speed of the rescue effort put on by international finance was extraordinary. In 2020 US$1trn of equity was sold, for instance, while global bond issuance was more than five times that total (spare a thought for the handful of people at IFR whose job it is to enter all those deals into our creaking database).
Companies that would have become wards of the state or more likely entirely cease to exist were kept afloat by the money advanced or corralled by banks. Yes, that effort relied on central bank and government backstops, but those deals didn’t arrange themselves.
And don’t forget the part finance played in what looks to be our salvation. Moderna sold some US$2.5bn of public equity in the past two-and-a-bit years. For BioNTech it was US$1.2bn in a similar timeframe. Those bets paid off. In more ways than one.
To add to the drama, the industry played its part in 2020 crisis management from the bad-back inducing discomfort of spare bedrooms and kitchen tables via Zoom calls and VPNs (it grates a little, but a word of thanks to the tech-ops and help-desk people might be in order at this point).
It seems extraordinary looking back, but in a few adrenaline and confusion-fuelled days in March, the industry created a whole new model of how it will operate for the foreseeable future. Virtual roadshows, due diligence via drone, WFH, VOE, digital signatures – and the constant refrain of “you’re on mute”. It was a decade of progress in the space of a few weeks.
Even when offices fully reopen, the world of work will have changed. Possibly even for the better. It really was a case of “never let a crisis go to waste”.
Yet 2020 wasn’t just about the coronavirus crisis. It was also the year that ESG financing moved into the mainstream.
What was once mocked as a haven for tree-huggers playing at changing the world became something that even the most traditional of financiers had to take seriously – or at least pretend to take seriously. A year that started with unprecedented bushfires raging in Australia was also the year when transition and sustainability-linked financing began to come of age. The S in the acronym got a hearing like never before, against the background of demands for racial justice.
It is also traditional – bar for a few years after 2008 – for this page to gently suggest that the banking industry is (on balance, with all things considered) a force for good that contributes to the efficient functioning of an increasingly prosperous world.
There are many who will vigorously dispute that suggestion, but 2020 provided ample evidence to that effect. If you want the world to be a better and healthier place, it helps if there is enough money to pay for it and people who know how to get that money to the right places.