The adage that every crisis is an opportunity in disguise is especially true of bankers who shifted their strategy to entrepreneurs. Will finance step up to the challenge they now face?
«Bankster» – since the financial crisis of 2008/09, anyone in finance is at some point confronted with the portmanteau of banker and gangster. Despite by banks to improve their image, big bonus scandals and most recently a tragic espionage case at Credit Suisse are keeping the reputation of bankers at a low.
Coronavirus has the potential to change that: literally a matter of life and death, economically speaking, the crisis presents a historic opportunity for banks. As the global economy likely heads into recession, the institutions are the linchpin between the real economy and financial markets.
Corona's Collateral Damage
Switzerland's banks, still deeply scarred by the grounding of national carrier Swissair in 2001, have several advantages. As schools send students home, restaurants, and sports facilities shut down, bank branches are still open for business. The government is sending an important signal about the systemic relevance of finance.
This give the banking sector far more room to maneuver than other businesses – but it also gives them massive responsibility. Another advantage for banks, as EFG Bank's chief economist Stefan Gerlach told finews.com, is that banks don't necessarily face a liquidity crisis, as in 2008/09.
Step Up for Entrepreneurs
The real problem is the pandemic's spread, Gerlach noted, and not the banking system – plummeting financial markets are collateral damage from a widespread healthcare crisis.
In other words, the current crisis isn't one of survival for banks – but it is one for their small- and mid-sized business clients. Several banks have realized this and pledged quick help: state-backed Zuercher Kantonal said it put aside 100 million Swiss francs to assist firms facing liquidity troubles.
Cantonal banks in Lucerne and Bern followed suit – and Credit Suisse under ex-investment banker Thomas Gottstein reportedly envisions a public-private fund seeded mainly by Switzerland's two largest banks. This is exactly what one would expect of a bank which pitched itself as «the bank for entrepreneurs» since 2015.
Taking Clients by the Hand
This is the time for not just Swiss banking's corporate teams to step up: private bankers need to take their clients by the hand – figuratively, because social distancing – and help them secure their funds.
The same with retail bankers: no simply closing the door to angst-ridden savers who want to withdraw an emergency cash ration. Mortgage lenders have a role to play in not pushing the property market deeper into crisis.
Flighty Goodwill
This is asking a lot, and the devil is in the details, as the idiom goes. If banks tighten requirements for additional liquidity, if wealth managers are too rigorous in calling Lombard loans, and if banking's collective response to lower revenue is to lift fees: precious reputational goodwill will be wiped out in one swoop.
There is the danger of falling into old habits: despite numerous «lockdown»-caused delays, Swiss banks are about to conduct their annual investor meetings. The events are a showcase for discussing the «old world» of banking: above-average pay, frequently for subpar performance. Hopefully, bankers have internalized the writing on the wall in this respect as well.
