There is no pandemic playbook
As a leading voice of responsible and sustainable professionalism, the Institute has a vital role to play in connecting its members to new perspectives and insights, says Institute Vice-President Steve Pateman.
Lending facilities are structured through covenants and amortisation to reflect the business plan in front of you. But, as in most aspects of our lives, the coronavirus changed the rules overnight, effectively turning off revenues. That’s not something that has ever happened, even in wartime, stresses Steve Pateman, Vice-President, Chartered Banker Institute.
“If banks with a very clear and robust structure applied the same criteria that has served them well for many years, they quite simply would not be lending,” he says. “Because, at the time of speaking, nobody can provide reasonable assurance that their business will recover.”
A return to tradition?
Whichever way you turn, businesses and individuals are dealing with an unprecedented situation, he notes.
“I think the best thing you can do as a bank is to try to find a way to ask: ‘In my judgement, will this business be able to survive this type of impact – and at what level will it survive?’ And therefore, what is a sensible level of gearing, what flexibility does the covenant structure need to give in order to allow the company to adapt to a very fast-moving situation, while giving the bank the controls it needs to step in when it needs to?
“A lot of the traditional skills that one would have accumulated in banking over the years, in terms of lending to businesses and individuals, are very valuable in this context,” he believes. “But they’re going to have to be applied to a different prism to the traditional one.” Professionalism and the need for qualifications in banking will be more important than ever, adds Pateman.
Customer or business, we all face new challenges – and there is no existing plan or blueprint to turn to.
“But when there is no playbook, leaders instinctively look elsewhere for the information, guidance and perspectives they need to build their own,” he says.
Pateman, a CEO himself, notes the value of a virtual event he attended, during which attendees heard from an economist, debt strategist and other experts.
“As I navigate the company through the next few months, access to insights on predicted economic output, equity market and investor sentiment and other companies’ thinking on the new landscape will continue to be incredibly important.”
He hopes a recent COVID-19 Institute webinar, among the most well-attended it has ever run, served a similar purpose. Hosted by President Bill McCall, the virtual event asked: “How are UK banks and bankers responding to the Coronavirus crisis?” and, due in part to demand, has now been followed by “What is the ‘new normal’ for UK banks and bankers post COVID-19?”
Pateman believes the Institute has an important role to play for its members in this respect, as part of its broad remit to enhance and sustain professional standards in banking. “Remaining relevant is an ongoing challenge for professional bodies, not just a result of where we are today. We do not impose relevance in banking by making professional membership mandatory, instead it must be earned.” One of the ways in which this can be achieved, he believes, is by being a thought leader.
The two webinars mentioned in this article – and more – are available on the Institute’s BrightTALK channel.
If you would like to contribute your views as an Institute Advocate, please contact Matthew Ball, Head of Public Affairs, Policy & Communications, Chartered Banker Institute, at [email protected]