Banks and Covid-19: a new life after lockdown

Central banks have showered them with new funding options and supervisors have stripped back some their capital and liquidity obligations, in an effort to help them lend more to those most in need during the pandemic.

But how will the banks cope with the new risks they are being asked to take? What impact will the coronavirus have on their footprint in the capital markets?  What kind of backing can the industry expect from its traditional investor base?

Prominent participants in the financial institutions bond market came together in May to discuss these themes on a videoconference, as part of the Global Borrowers & Bond Investors Forum — Virtual 2020. They also spoke of what it has been like to work through such unusually testing times.

Isaac Alonso, head of financial institutions debt capital markets, CIB, UniCredit Bank

Rob Collins, head of treasury markets and chief investment officer, Nationwide

Peter Green, head of senior funding and covered bonds, Lloyds Banking Group

Miray Muminoglu, managing director, head of term funding, treasury, Barclays

Richard Staff, managing director, head of capital and term issuance, Standard Chartered Bank

Moderator: Tyler Davies, banking and Europe editor, GlobalCapital

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GlobalCapital: The Covid-19 pandemic is clearly having a huge impact on the size and shape of bank balance sheets. How has the crisis changed your outlook for funding this year?

Peter Green, Lloyds: You probably need to separate things into different products sets. From a UK perspective, we have clearly seen an affirmation of capital and MREL requirements as part of Q1 results disclosures from most of the major banks. But there has generally been a clear signal with the introduction of TFSME that any opco funding needs are likely to be minimal, if not completely zeroed out in 2020 plans. 

In terms of Lloyds, we have made decent progress on MREL this year and we are now guiding that Lloyds Bank opco debt funding is going to be much lower this year. That is even to the extent that we have launched a number of liability management exercises at the Lloyds Bank level to offer liquidity to investors and take some of that backbook stock out of the market.

Rob Collins, Nationwide: We saw around £11bn drawn in TFSME through the initial drawdowns, which is an indication that most of the large players likely participated in the first wave of that scheme. To pick up on Peter’s point, it is unlikely you’ll see that much more issuance from a large UK retail ring-fenced bank or building society. 

That said, it does feel very much like it did a couple of years ago when the internal conversations were about ensuring a minimum presence in certain funding instruments and markets alongside attractive Bank of England schemes. Some firms will be seeking to strike the right balance between TFSME usage, which is obviously very compelling, and whatever else they may have options to do in the market.

It is also not unreasonable to think there are quite a few unknowns around our core retail markets. What does post-Covid credit appetite look like and what kind of share will lenders have in the mortgage market? Those kinds of questions will be coming into all of our thinking and will also shape our funding appetite.

Isaac Alonso, UniCredit Bank AG: If we take numbers from 2020 year to date, we saw massive supply in January and February. That was from all financial institutions, including insurance companies and banks, and it came across the whole capital structure, from subordinated debt to covered bonds. In total there was pre-coronavirus supply of roughly €100bn. 

When the crisis began, we saw supply volumes drop and issuance was mostly concentrated between senior preferred and senior non-preferred.  There were a few covered bonds, but that was relatively surprising because we are now expecting a tremendous drop in covered bond issuance for 2020. Anything that is related purely to funding will be replaced by liquidity from the European Central Bank via TLTRO. TLTRO is coming. 

You might have seen the huge volumes of retained covered bonds issued recently. About €100bn of covered bonds have been issued by banks and retained on the balance sheet to be used as collateral to obtain liquidity from the central bank. This is going to have a massive influence on bank issuance patterns.

That being said, if you look at the funding plans of the major European banks, we haven’t seen many dramatic changes so far. The implication is that the current situation vis-à-vis balance sheets cannot yet be predicted in full. We will probably see refinements of Q2 funding plans for some euro area issuers.

Green, Lloyds: On that point, has there been any surprise at what seems to be quite a lot of senior preferred issuance from European names? That product could be described as a core funding instrument, so it is surprising to see that banks are still issuing in large volumes, given the availability of the ECB’s TLTRO money?

Alonso, UniCredit Bank AG: Although senior preferred is a funding instrument, it can still be used for MREL and TLAC purposes. Banks have 2.5% of leeway to use the product for these requirements. If you take the pure MREL number, as long as a bank is fulfilling its subordination requirement, it is allowed to use its stack of senior preferred. So the purpose of the asset class is not only to generate liquidity, it can also fill regulatory buckets.

With that, I’m not surprised at the recent funding activities of European banks in senior preferred and non-preferred. I think this pattern is likely to continue. Despite all of the regulatory relief we have seen, banks will still need to fill their regulatory buckets.

GlobalCapital: What about your plans, Richard and Miray? Has the coronavirus pandemic altered your priorities?

Richard Staff, Standard Chartered Bank: We don’t have a huge wholesale funding need at all because we tend to be client funded. But I am staggered at how much supply we have seen in the past few weeks. 

Lots of people funded themselves in January and February and got a good start on the year, us included. Then the crisis hit and we had a substantial hiatus in the market, but recently there has been a lot of funding going on in every format.

I’ve been really surprised by the level of appetite we have seen, given the macroeconomic uncertainty we are facing.

I completely agree with Pete that there will be a huge fall off in pure funding from banks. But the regulatory balance sheet, as Isaac and Pete both mentioned, will still need to be funded — whether that’s capital, or MREL, or term funding for the LCR and NSFR. Some banks may also have calls and maturities this year that they will probably choose to refinance. 

It will be interesting to see how far banks are willing to let total capital drift down in this environment. Even if the supervisor is saying it is OK, you may want to maintain certain metrics for your balance sheet if you want to hold on to a peer ranking or if you want benefit from rating agency credit.

For those reasons, I would expect there to be continued supply of non-equity capital throughout this year. But I would also expect the volumes to be lower than they would have been otherwise, purely because banks won’t want to be paying the spreads that are on offer at the moment.

Miray Muminoglu, Barclays plc: From our perspective, we have always maintained that the bulk of our financing this year will be regulatory funding out of the holding company. Opco issuance was always going to be an exception and, given that these are exceptional times, we did choose to do some funding at the opco level in May. 

The numbers in our funding plan have not changed. Depending on how Q2 turns out, we could update our issuance targets at the mid-year results. But currently it is expected to be a modest year for us, with £7bn-£8bn to do compared with the £11bn-£12bn we printed each year between 2016 and 2018. Owing to those early issuances, we are within a point or two of our MREL requirements and that means we don’t need to be issuing in very large sizes.

It was interesting to see how much the US banks have done during the March to April window. Obviously their balance sheets have ballooned, and it will be interesting to see if they take a break or continue to do the same in the market.

To Richard’s point, investors always ask us how we can issue at these elevated levels. Well, I think banks ought to be issuing through the cycle. We can’t be too cute around measuring the spread levels at this stage. We are going to have to be a bit of a price taker and just be smart about the trades that we do.

GlobalCapital: It is an interesting point about how much busier the US banks have been in the funding markets recently. But European banks have also seen a lot of risk-weighted asset inflation as a result of increased borrowing from corporates during the coronavirus pandemic. Shouldn’t that lead to higher overall funding requirements?

Staff, Standard Chartered Bank: We have seen some corporates drawing on revolving credit facilities, mostly in March. In a number of cases the money was drawn and then placed back at the banks, so there was a limited impact on liquidity even if it did drive RWAs up slightly. It is an interesting dynamic.

But I do think the central bank backstop that is effectively in place now makes a significant difference, particularly for US corporates. Even if these companies are not using Federal Reserve liquidity per se, they now have a backstop for their funding levels, which means they can access to the market. So the peak draws were clearly at the end of Q1. 

It is also clear that banks really showed strong LCR and liquidity metrics in their Q1 results. In some cases, LCR levels actually went up versus full year 2019, which I think is a testament to how well banks are managing their way through this process. I think everyone is very clearly focused on maintaining strong levels of liquidity in the face of this crisis.

Collins, Nationwide: That’s a really good point. Given everything we’ve been through since the last crisis, we all have much stronger resources, even absent any support from central banks. It means we enter difficult periods from a really helpful starting point in terms of balance sheet strength.

I also think that towards the end of 2019 many firms had been anticipating that 2020 would be a year of two halves for market funding. We feared the second half of the year might not be so pretty, given the US election and Brexit, and so we thought we would try and get ahead of the game in terms of funding. 

As it happened, we got a little bit excited. In any one average year we tend to do about £8bn equivalent of wholesale funding in one form or another, but we ended up doing half of that in January alone. So when the uncertainty hit in March, we were set up well with a whole stack of funding resources. I suspect some of the issuance we are seeing now is a little bit of a catch-up from those that had been planning to do things perhaps a little later in H1 2020.

Alonso, UniCredit Bank AG: It is true that many banks were frontloading their funding activities in January and February due to favorable market conditions and because 2020 was expected to be a bumpy year. They also went into this crisis in good shape, which is important. 

But with regards to the high LCRs we have seen the banks reporting, you have to take note of recent measures from central banks, including the ECB, in reducing haircuts and accepting more and more collateral that wouldn’t have been permitted before the crisis. That has given banks more room to manage their LCRs, exchanging encumbered HQLAs into unencumbered HQLAs. 

GlobalCapital: So European banks were already very well funded going into the coronavirus crisis?

Green, Lloyds: I wholeheartedly agree. The expectation was for a lighter funding year in 2020, but with some degree of caution as to what the second half could look like. 

Clearly banks have also built up their capital and liquidity metrics following the global financial crisis. But a key difference this time around is that banks are being seen as part of the solution, rather than being seen as the cause of the problem.

That is a huge positive for financial institutions, which can make sure that the support is there for their customer bases.

Certainly, my perception of what has gone on is that banks have been well prepared. Their balance sheets are in good shape — we’ve seen that in Q1 reporting. But the outlook also remains uncertain. I would expect that institutions would therefore continue to maintain prudent approaches from a capital and funding perspective, so that they can carry on being a stable transition mechanism for government and central bank policy.

One of the things I would take from the past couple of months is that the market has adjusted to the new situation very, very quickly.

There was probably a seven to 10 day period in early to mid-March where there was no bank supply that came to the market. But in March and April there were record volumes of issuance. I think this is something we have all seen following the global financial crisis. We no longer see huge breaks appearing in the market and hopefully it can continue to price risk reasonably efficiently.

GlobalCapital: Yes it is certainly clear that markets have re-opened very quickly following the onset of the coronavirus pandemic. All of you here have been able to launch new deals in recent weeks. How have you found that experience — issuing debt in the middle of a very uncertain period for capital markets?

Muminoglu, Barclays plc: Clearly the actions of the Federal Reserve and other central banks have been a huge shot in the arm for markets. With spreads having moved so much wider in such a short period of time, we ended up seeing a lot of interest in our paper — and I don’t think that’s any different to the experience of any of my peers. Take, for example, the €2bn euro senior transaction that we did from our holding company in March. We have to acknowledge that euros have been a tough spot in the market for us for quite some time in the wake of Brexit. But the granularity and the breadth of the distribution on our new deal was as good as any I have seen in the last five years.

It was, of course, interesting to see investors who are known to be tier two and AT1 investors coming into senior land. They were able to pick up senior paper at a level that they wouldn’t have been able to fathom previously. But either way, the reception we had in both euros and dollars has been very, very strong.

Staff, Standard Chartered Bank: I would echo Miray’s sentiment there. A lot of investors who I would historically classify as equity or high yield investors, particularly in the dollar market, were suddenly enticed into very well capitalised and highly regulated bank supply. As a funding team you probably would prefer not to see them in your senior trades, because that means you are paying funding levels that you would never have imagined. But they have provided a significant level of support for transactions that have gone very well recently, including our own $2bn senior deal in dollars at the end of March. It just shows how well funding markets do work when these kinds of situations play out. Investor demand is very, very high given where rates are.

It is interesting that some of what I would class as the anchor investors over the past three or four years have been much less evident in recent trades, while these other high yield investors have picked up the slack. When the pendulum swings back, then the high yield guys will go and hopefully the typical investors will return in larger size again.

Muminoglu, Barclays plc: I agree with Richard and I think it was actually quite pleasing to see that. There are normally two or three investors in every deal — and we all know who they are — that you rely on to anchor most trades. Those investors were certainly on the sidelines recently. To be able to raise large amounts of funding without any reliance on the world’s top two or three investors was actually quite satisfying. It shows the diversity of your investor base.

GlobalCapital: UK lenders tended to be quicker than euro area banks in stepping back into the funding markets in March, though spreads were still very elevated. Why do you think that was?

Green, Lloyds: As a bank you do generally tend to want to fund yourself through the cycle. While the spreads that were available in March were a bit more painful, you do still have issuance needs and the outlook is still very uncertain. It is prudent to take opportunities when they present themselves.

Issuers can also be part of the solution in terms of helping markets heal themselves. The more trades that do come to the market, the higher the degree of confidence that investors get that deals are working. It becomes part of a self-fulfilling prophecy that leads to spreads tightening and market dynamics improving. 

We all have finite issuance windows, given your reporting periods and such like. It is the prudent thing to do to maximise your funding opportunities when you have them.

Staff, Standard Chartered Bank: In March you had huge supply coming from US banks, with each one of them funding every other day. That was the first cohort. Then we had another cohort with the UK and Swiss banks all arriving in the market together at the end of March.

As Peter said, it is all part of a healing process. The US banks showed that there were good levels of investor appetite. Then, once price discovery became more certain, it became the obvious thing for us all to do to bring structural funding on to the balance sheet. We only have limited windows throughout the year to do that.

We had a funding plan that was at the high end of our recent history this year. That’s probably unchanged. So we didn’t want to delay any longer than we already had.

Muminoglu, Barclays plc: You’re right. Between closed periods and the global bank holidays, we only have about five days to issue roughly £10bn in a given year, so we have to use every window!

What surprises me is that if you look at the regimes that made no announcement around MREL or TLAC forbearance — which is basically the UK, the US and Switzerland — we actually just got on with our lives.

Whereas the very modest pipeline of senior non-preferred from some of our European peers leads me to think whether there is some expectation of MREL forbearance from their regulators. There are clues to that. We hear that they will look at an extension to 2024 for the Danes and the Swedes. 

Staff, Standard Chartered Bank: Also in the UK, the US and Switzerland, the banks are basically fully compliant with MREL and TLAC already, which makes a big difference. It maybe gives those regulators a different problem to solve. 

Collins, Nationwide: You hit the nail on the head earlier, Richard, in saying that it doesn’t really matter if we get any kind of relief, given the strength of resources. We are all very keen to show that we are in the pack. It almost becomes a conversation about keeping your resources where they are, instead of taking huge amounts of benefit from regulatory relief or a deferral of deadlines. No one wants to be looking at a CET1 chart or a leverage ratio chart and seeing themselves as a material outlier. That in itself drives the appetite to keep things in the status quo, give or take.

GlobalCapital: It would be interesting to hear your thoughts on the European side of things here, Isaac. Do you think there is an expectation in the euro area that MREL requirements could be loosened or deferred?

Alonso, UniCredit Bank AG: I can only interpret and read between the lines of what the Single Resolution Board has said recently, but I don’t think there will be relief on MREL. Elke König was very clear in saying that if a bank is struggling to fulfill the current MREL requirements, then there could be a solution for that institution. I didn’t read that as a one-size-fits-all policy, suggesting that the deadlines could be pushed back for everyone.

My reading is also that the strong banks and the tier one banks will not ask for any relief because it may be interpreted as a sign of weakness. This is why we are still seeing banks issuing senior preferred and senior non-preferred, even though spreads are still elevated. We are in a cyclical business and we need to cope with that.

GlobalCapital: How is the outlook for regular funding products, like preferred senior debt, covered bonds and structured finance instruments? Clearly the central banks are going to be offering liquidity during the coronavirus pandemic at very competitive terms — through the TFSME in the UK and the TLTRO in the euro area. But what do banks think about these schemes? Are they willing to rely on them for funding?

Green, Lloyds: It’s an interesting one. The schemes will give issuers an alternative source of funding. If we were to take a step back three to four, five or six months, the focus in the UK market was largely on how the smaller institutions would refinance the first TFS.

That conversation has been consigned to the past to some extent, and the possible refinancing problems have been kicked down the road. 

I think institutions will use the central bank funding as a means of supporting their customers. It is also a welcome tool in terms of providing some further stability to markets, in the mix of all of the other forms of support that have been have been announced. But there will be one eye on the deployment of that liquidity, plus the future challenge of how you refinance a scheme that is larger than the first one and is concentrated in what is potentially a shorter drawdown window. At some point we’ll undoubtedly start to move on to talk about the refinancing considerations and maturity concentrations that this sort of scheme could give to issuers over the course of the next four or five years.

Alonso, UniCredit Bank AG: It has already been said here, but banks are part of the solution. They will use the TLTRO to help fund SMEs, which are the backbone of the European economy. The point is that banks have to take an economic view of their funding and, at minus 1%, the TLTRO can be used very efficiently. I would expect a huge take-up for this kind of liquidity. 

Collins, Nationwide: We are conscious that as a building society, we don’t enjoy some of the equity-like coverage that large banks do around the globe. It is therefore a bit difficult sometimes to go knocking on the doors of US investors who may not have heard from us for a year or two.

So we always want to make sure that our presence is known in the market, and that really goes back to what we are saying to investors and the market presence I referred to earlier.

Though access to funding schemes like TFSME is absolutely part of the suite of options, it’s not wise to focus your whole effort on it. That was our approach through with the first TFS scheme and I think that it still holds true. 

The other thing to consider of course is that, while the TFSME can leave you with a maturity concentration, you are free to repay the funding at any time. That does give you a little bit more flexibility around how you may think about using such schemes.

Staff, Standard Chartered Bank: Given the bank we are and the markets we operate in, the ECB scheme or the Bank of England scheme are not so relevant.

I do think that the speed at which these schemes have been put in place now compared with a decade ago, and the breadth of them this time around, is really something that has a wider benefit though. They are the tide that floats all boats. They make it easier for everybody.

GlobalCapital: What about the question of capital management? We have seen a lot of new announcements from regulators during the coronavirus crisis, including the conversion of Pillar 2A into a nominal amount in the UK and a change to allow subordinated debt as part of Pillar 2 requirements in the euro area. Have the relief measures changed the way you look at financing needs in the subordinated bond markets, or how you look at upcoming call decisions?

Staff, Standard Chartered Bank: We called $2bn of AT1 earlier this year. We are comfortable with our overall capital position relative to our minimum requirements. The freezing of Pillar 2A is not a huge change, other than the fact that it would remove any capital pressure coming from RWA inflation, which could clearly be helpful. 

I think banks are generally going to try and look at it as business as usual when it comes to maintaining prudent stocks of non-equity capital. Now, given where spreads are, I think there’s a very interesting dynamic on extension risk for tier ones. These are perpetual instruments, and anybody that wants to take an economic decision on a call this year will be more easily forgiven than in prior years, if I can put it that way. 

You will also continue to see AT1 supply and you will continue to see people call and re-issue. I don’t think we are going to see an increase in the stock of AT1 in the UK at least. Maybe that is different in Europe, given their changes to Pillar 2. But in the UK, I think we are probably broadly at a steady state.

Muminoglu, Barclays plc: We have flagged our expectation that MDA triggers would come down because of the Pillar 2A changes. That is where I think the market will get the most benefit, in terms of giving more comfort to investors on MDA. But I don’t think this means less AT1 issuance across the cycle, because we cannot only think about the next six months. We plan on two, three or even five year cycles. I don’t think overall supply volumes will change. But the measures were helpful in getting issuance going again, because of the relief it provided.

Alonso, UniCredit Bank AG: In particular, the changes to the Pillar 2 Requirement — making sure you can use not only CET1, but also tier two and AT1 — will give European banks a lot of flexibility in their capital management. In Q1, all of the banks were talking about how to optimise P2R using tier two and AT1. 

There are banks that have already filled their 1.5% AT1 bucket and 2% tier two bucket for Pillar 1, and they can use the additional buffer in order to optimise their P2R requirement. But you will also see banks starting to issue new tier twos and AT1s to substitute CET1 and maintain their MDA buffers. A very good example is the recent tier two from Deutsche Bank. A week before, they reported their capital levels for Q1 which showed that they still needed to fill up their tier two bucket.

I agree with what Richard said on AT1s in that we might see some extension risk. But if banks are going to use the P2R relief, some of them will also have put new AT1s on their funding agenda sooner or later.

GlobalCapital: The coronavirus crisis has been remarkable in part because it has had such a profound impact on how people work and move around. The nature of this very conversation speaks to that fact, given we have all been moved online. Have you found it difficult working from home during this period? What sorts of challenges have you encountered?

Green, Lloyds: Miray and I launched trades on two consecutive days and we did end up sharing war stories about having to fight the kids for monitors. But actually I have been really surprised at how smoothly things have worked.

Overall it has been a fairly seamless transition in terms of executing transactions. Yes, doing a deal from the dining table is not necessarily ideal, but operationally you would have to say that all of the systems and the infrastructure have worked very well.

Where you might lose out is with the immediacy that comes with having contact with your team. If you are executing a transaction, you probably do lean on the team an awful lot more when you’re in the office than you’re able to over the phone and from a distance. Communication has really been an area where we have tried to learn lessons when we’ve done trades, so that when the next trade comes along, we get better and better. 

Staff, Standard Chartered Bank: Last year I happened to execute a trade from a hotel room in Hong Kong and at the time I think I vowed to never do that again — just because it is just nowhere near as efficient as being in the office. Now obviously we are doing trade after trade from home. It is amazing what you can get used to.

When you connect with investment banks they are all over the world anyway, so that has always tended to be on the phone or via Bloomberg. That is basically unchanged. But the speed at which investment bankers have gotten up to scratch with things is really testament to their adaptability and their IT systems. There were probably much bigger barriers for them. I understand investors took longer to set themselves up because they have different challenges, but that still all happened very quickly.

As Peter said, the connectivity with your teams is probably the hardest thing, but it is amazing to see how quickly life can continue.

I’ll add one more thing. Miray, Pete, Rob and I have all been doing these jobs for quite a while, so we have very good long-term relationships with a lot of the syndicates around. It would be very hard to build that same level of trust from scratch today, working virtually. That is a completely different challenge that the people who come after us might have to face.

Alonso, UniCredit Bank AG: I really echo those comments. Probably the most challenging part of all this for me has been the homeschooling. But aside from that, it has been the lower level of connectivity you have with your team.

I’m thinking in particular of things as simple as just walking around and having a discussion with syndicate. Now you have to organise that — I think my agenda is probably fuller than it has ever been. 

But it does work and as a platform we have adapted. I have gone from working for 20 years on a trading floor to sitting in my home office executing deals and understanding what is going on in the market from there. It has accelerated the digitalization that was already underway.

I certainly never thought I would miss waking up at 4am to catch a flight. I hope that those times will come back and we can meet up again physically and sit around having a coffee together. But for the time being, we’re making it work.

Collins, Nationwide: There is definitely a generational point to make here. Perhaps unsurprisingly, I observe that it is the younger generation who are itching to get back to the office. A lot of that is for social reasons, or maybe it has something to do with the impracticality of being in a flat-share, with two or three people trying to use the same dining room table.

On the flip side of that, we have been trying to encourage people to think flexibly about how they work and equip themselves to be able to work from home. Some people of my generation felt very uncomfortable about that at first. But many of them are now starting to wonder what the fuss was about.

I do think this will end up being a game changer. It could change the whole process of how firms think about working arrangements and their physical estate.

Muminoglu, Barclays plc: It has worked well so far. I wish it also worked for Depository Trust Companies so that we didn’t have to come up with wet signatures. That seems a bit retro to me.

To the outside eye we are all funding officials, so we do funding. But I think we do a lot more than that. We work with the liquidity, capital and resolution teams all the time and on top of your formal meetings with them you pick up so much when you meet with your colleagues informally all over the treasury floor. The way you respond to that information can make you a lot more powerful. This is what we are obviously missing. As much as I make time for catch-ups with teams that are outside of mine, it is not the same as walking over to someone covering liquidity or capital and having a chat. We cannot replace that at home.

GlobalCapital: Do you think there are likely to be any lasting impacts from the disruption we have seen during this pandemic?

Muminoglu, Barclays plc: Yes, I wonder how we are going to justify long distance trips to see investors. On the one side it is so obvious that we don’t need to do that anymore and we can just use Webex or similar instead, because it works. But on the other side, I do think everyone still values the personal touch. 

In general, I would expect less physical roadshow activity, which would probably be a good thing for the world. It will be interesting to see how we strike the balance.

Collins, Nationwide: There had already been a bit of a shift towards more virtual roadshow activity. I think we’ll see more of that. I’d also like to pinch a quote from one of Miray’s colleagues, who asked whether firms would really need huge industrial buildings near Heathrow as their disaster recovery sites when we have all proven that we’ve got them at home. There is going to be a lot of thought around what the broader, physical estate of firms like ours need to look like.

Staff, Standard Chartered Bank: I can add on to that. It is very easy to kind of get carried away with all of the things that could change as a result of this because, frankly, everything could. But the question of physical location is probably the biggest issue. Everything is still very analogue in the bond industry. After all this, it will start to become more digital. The market will get simpler and we may start to see some more of the e-book builders, who put orders online for everyone to see. 

The market could also get faster, because everything is being done at 1,000 miles an hour at the moment and that is unlikely to change. Bond deals in certain markets, like Japan, can take four days to execute. How could that possibly be necessary now?

Those investors used to need several steps of credit approvals, but that isn’t practical when everyone is at home. It is interesting how investors in these sorts of markets have had to adapt more recently than, for example, investors in the US. I wonder how this could play out over time.

Alonso, UniCredit Bank AG: Echoing what Miray said, it could also be difficult to justify a trip to see investors going forward. But we are still a ‘people business’. I hope that we will be able to sit in front of investors and clients sooner rather than later to exchange views and ideas and have discussions. We should not forget about the personal side of what we do.

Green, Lloyds: I would pick up on the point that Richard made about decision-making having to be a lot quicker. We used to have some endless meetings, taking two hours or more to discuss something that we have now proven can be covered in the course 20 or 30 minutes. I think there will be a much more efficient use of our time going forward. Decision making processes will be shorter.

There are still a few improvements needed for some systems, but we have proven that we can do this. The next time I price a Samurai trade or a Kangaroo trade I might not have to be sitting in the office doing it. I might not even have to get out of bed to price the deal.  Perhaps we can assign some of those older practices to the past.