How has COVID-19 changed the way that you've been able to support your clients?
While we were already moving towards digital ways to engage with clients such as video conferencing, now it's strictly that. Face-to-face meetings are off the table for the short to medium term, if not longer. Now it’s about recreating the higher level of connectivity that a face-to-face interaction provides to ensure we maintain a high level of client engagement.
In addition, we need to adapt the market and thought leadership activities that we carry out in the region, such as breakfast and lunch roundtables, where we showcase our investor relations best practices or our transactional expertise. We need to leverage technology to make sure that this visibility continues in an impactful way. Webinars are very effective, but we need to ensure that we don't lose the personalized and more region-specific presence, too.
It's also important to remember that the crisis began to affect Latin America about two weeks after the U.S. While we were already ramping up work from home, our key markets in the region were still in the office. Now our clients are figuring out their work-from-home arrangements and how they will be working going forward. In general, things seem to be working quite well.
How have your work setup and working arrangements changed?
There's much more structure to my day than before. When you're in the office, it's a structured day, but there's a lot of opportunity for unscheduled work and ad-hoc meetings because of the physical proximity with colleagues. Today, even a brief consultation likely requires a scheduled slot in the calendar. I would also add that, while in the past, a primary focus for me was connectivity and engagement with clients and prospects, today connectivity and engagement amongst the Relationship Management team is an equal priority. This has always been a priority, but again, because of our physical proximity, it was more organic and easier to manage. In support of this, I am speaking to everyone on my team every day to ensure that everyone is as connected as possible.
What kinds of things have your clients been asking about specifically related to the impacts of COVID-19?
Clients always have questions around reporting, program activity, investor relations, and general market engagement best practices, and this continues. We are sharing how BNY Mellon is managing this crisis, as well as what we're seeing across the markets as clients respond to the impacts of COVID-19.
Also, right now we're in the middle of proxy season, so there have been a lot of questions about shifting away from the standard shareholder meeting format to a more virtual format. Clients are asking for our insights about how that works, which providers are available, how it impacts the vote of DR holders, and other implications.
What are some of the biggest impacts on securities markets?
Not surprisingly, the equity capital markets in Latin America are effectively closed, and anything that was in our new business pipeline has been put on hold. The volatility likely has a lot to do with asset values going down significantly, compounded with foreign exchange volatility. A stronger dollar versus the Mexican peso, Colombian peso, or Brazilian real has a compounding impact on share valuations. But at the end of the day, this is not currently about fundamentals. A lot of companies are still sound with strong balance sheets and they should be well-positioned to weather this crisis. Once things start to turn around, a lot of these companies will likely be looking to raise capital. We expect some follow-on offerings as these companies come to market to recapitalize. Companies will continue to come to market. Notwithstanding the current, very volatile environment, we have a cautiously optimistic view long-term. Timing is the big question.
As the crisis hopefully starts to subside globally, what are some potential scenarios you see for how things will change in the new world?
We believe that companies in the region will be looking for capital and tapping the equity markets as we come out of this crisis, so there is potential for increased activity relative to pre-pandemic levels. Also, as investors become more selective, DRs become increasingly important for issuers who want to access a more diversified and deeper pool of investors.
How have you seen this particular situation affecting IR teams?
IR teams are much busier than before. While they maintained a heavy investor engagement schedule in the past, now it's even more intense because investors want to know how any given company is managing and dealing with the COVID-19 pandemic. Since they have to field so many questions about business continuity and potential financial implications, IR teams are constantly on the phone or on video with investors.
In general, once this crisis is behind us, the capital markets should come back. As a business, we're doing everything we can to continue to stay connected with our clients. We continue to demonstrate market leadership in DRs across the region to ensure that we're best positioned to leverage those opportunities when they come about.
About Ed Piedra
Edgar Piedra is Managing Director and Regional Head for the Latin American Region of the Depositary Receipts division of BNY Mellon, responsible for relationship management and new business development across the region.
Ed started with The Bank of New York Mellon in 1996, gaining extensive experience in Depositary Receipts and with Latin American markets. Prior to assuming his current role he was DR Head of Hispanic Latin America and before that he managed strategic client relationships and sales efforts across that region. Previous to joining the Bank, Edgar held positions in the Treasury Group of Mitsubishi Bank and the Derivatives Group of Societe Generale.