What were your priorities for Corporate Trust and clients during the shift to home working and the volatile markets caused by COVID-19?
First and foremost was the health and wellbeing of staff: creating an environment that was as safe as possible was paramount. We quickly mobilised to have almost all staff working at home.
Secondly, we had to meet clients’ needs. Of course, this is always our focus but clients faced new challenges as a result of homeworking and navigating market turmoil. We needed to ensure that we moved in lockstep with our clients. That required frequent and clear communication and transparency at all times. We demonstrated a high level of resilience and were able to meet clients’ day-to-day requirements even during the most difficult times in March and April. Our operating procedures proved fit for purpose and allowed us to fulfil our daily deliverables and monthly reporting obligations. Client feedback has been overwhelmingly positive.
Thirdly, we were focussed on protecting our balance sheet given our status as a globally systemically important bank (G-SIB).
What have been the greatest challenges experienced by Corporate Trust clients?
Clients had to make sure that their own operational models were functioning as normal. For us to do our job as a paying agent, account bank or portfolio administrator, we rely on receiving instructions from clients and being able to authenticate them. We worked closely with clients and offered additional flexibility to enable that to continue. For instance, we have steadily been enhancing our digital capabilities in recent years to accommodate electronic signatures. These efforts proved valuable given the move to homeworking and were accelerated as a result of close collaboration with our Risk & Compliance team.
Clients also had to deal with market stress: their focus shifted from new business opportunities to maintaining existing business and deal portfolios. Given the volume of asset downgrades, clients had to very closely manage their portfolios to meet their compliance requirements. As a portfolio administrator, we had to execute and settle on a prompt basis and provide information about the impact of market shifts on portfolios. Transparent and timely communications were critical. Fortunately, the industry learned a lot from the financial crisis and as a result could mobilise seamlessly in a short space of time. And both the industry and clients showed great willingness and agility in order to get things done.
What will the ‘new normal’ look like for clients and the industry?
The assumption is that any return to office environment will be very measured and the outcome will look different to what it was in early March. The expectation is that it will take a considerable amount of time to return to a ‘normal state’ office environment.
Additionally, the industry should seek to learn some valuable lessons from this crisis. Despite the sophistication of the financial services industry, multiple manual processes still remain in place, relating to authenticating payment instructions, for example. Many aspects of our business are ripe for automation and digitalization. We see big opportunities for the industry within the digitalisation space and are working with issuers and ICSDs to accelerate automation to make issuance and other processes more efficient. The experience of recent months will undoubtedly help advance that agenda.
Has COVID-19 sidelined other strategic objectives for clients and the industry?
Environmental, social and governance (ESG) issues have arguably become more important as a result of the COVID-19 crisis. ESG exposure and risk has been a key consideration as people have reassessed their portfolios in the light of market turmoil. Our own initiatives in this area have continued unabated. For instance, as a key player in the green bond market, we are working with other market participants to use technology to make it easier to verify ESG reporting and avoid ‘greenwashing’, which risks undermining confidence in this rapidly growing market.