By Michelle Price and Imani Moise
WASHINGTON/NEW YORK, Feb 28 (Reuters) - Big U.S. banks have
been rolling out contingency plans to respond to the global
coronavirus outbreak - requiring some staff to work from home,
implementing travel restrictions, and talking to regulators
about potential stresses.
The preparations come amid growing fears that the
fast-spreading virus which has infected around 83,000 people in
more than 50 countries could lead to a global recession. Stock
markets have plunged, with the S&P 500 index dropping
11.5% this week, the worst showing since the 2008 financial
crisis.
Banks are not the only companies affected by the spread of
the disease, but their position as market intermediaries and
custodians of critical infrastructure has put the health of
their employees, operations, and balance sheets in the
spotlight.
On Friday, U.S. presidential candidate and Massachusetts
Senator Elizabeth Warren sent a letter to the five largest U.S.
banks asking how they are preparing to mitigate the risks of the
outbreak.
"As a globally systemic important bank, your institution and
the customers it serves could be impacted either directly
through exposures to areas where the virus has spread or
indirectly through a change in market conditions," she wrote.
Financial firms started dusting off long-standing
contingency playbooks several weeks ago when the virus was
spreading through China, two industry officials told Reuters.
Big U.S. banks are in daily contact with federal, state and
local regulators on a range of issues, sources said, but lately
coronavirus preparations have taken center stage. Discussions
have centered around how to keep markets, transactions and other
banking functions operating smoothly, as well as handling
employee quarantines.
One major bank brought an epidemiologist into its regular
risk management gathering on Friday morning, a person who
attended the meeting told Reuters.
JPMorgan Chase & Co, the largest U.S. bank by
assets, told employees on Thursday that it was restricting all
but essential international work travel due to the continued
spread of the virus.
Citigroup Inc has restricted business travel in all
Asian countries and Italy, and has asked employees who have
visited affected areas to work from home for 14 days, a person
familiar with the matter said. The bank has also imposed
short-term restrictions on large meetings that require
international travel.
Earlier this week, Morgan Stanley and Goldman Sachs
Group Inc asked attendees of several conferences they are
hosting in the coming weeks to disclose if they or people they
have close contact with have traveled to mainland China, South
Korea, parts of Italy and Japan.
Goldman Sachs asked them to skip the conferences if so. In
Goldman's New York headquarters, signs posted at check-in ask
guests who recently traveled to China or had close contact with
someone who did to reschedule their meetings.
Several major banks in Hong Kong and Singapore, including
HSBC Group Plc, Morgan Stanley, and DBS Bank, have also
restricted travel and are allowing staff to work from home.
Citi has imposed tighter restrictions in affected countries,
including temperature checks and home-working, the person
familiar with the matter said.
Many are also preparing workforces to work from home and
dishing out hygiene advice, urging staff to frequently wash
their hands and use antiseptic wipes, sources said.
LONG PREPARED
Since the 9/11 terrorist attacks on in New York, Wall Street
has developed extensive contingency plans for dealing with large
scale disruptions, including pandemics.
They most recently deployed such plans during Hurricane
Sandy in 2012 and reviewed and updated them after that disaster,
Kenneth Bentsen Jr., chief executive of the Securities Industry
and Financial Markets Association, which leads industry
continuity planning, told Reuters on Thursday.
If an outbreak of coronavirus hits New York, markets would
likely continue to function even if the floor of the New York
Stock Exchange had to close. Stock exchanges have said they have
contingency plans.
Financial firms have back-up facilities in U.S. cities
including Dallas, Tampa, Chicago, and Phoenix from which they
can continue trading and perform other vital functions, although
U.S. banks have yet to activate them, two sources said. Some
banks in Asia are already using secondary sites, they said.
Lenders are also considering splitting up critical teams
into rotating shifts and physically distancing staff from one
another, the official said.
"It's something the industry regularly plans for," said
Bentsen. "We're prepared as we need to be."
(Additional reporting by Elizabeth Dilts and Matt Scuffham in
New York; editing by Lauren LaCapra and Rosalba O'Brien)
HSBC Holdings (HSBA)
