Banks not returning to skyscrapers soon: Barclays

New York

BANKERS yearning to return to their high-rise offices should brace for disappointment.

Headquarters built to house thousands of staff might be a "thing of the past" if social distancing means only two people can take an elevator at a time, says Barclays chief executive officer Jes Staley, echoing rivals' concerns.

"There will be a long-term adjustment about how we think about our locations," he said during a conference call after the bank reported earnings on Wednesday.

Branches might work as alternative sites for investment bankers once staff are cleared to stop working from home, he said.

As the outbreak starts to ebb in some locations, the largest banks are grappling with how to plan a gradual return while adhering to social distancing rules.

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Morgan Stanley CEO James Gorman realised earlier than most that the bank would have "much less real estate", while Deutsche Bank's Christian Sewing said the crisis highlighted how much the lender could save on office costs.

Citigroup has already warned that some of its employees may spend the rest of the year working from home.

But real estate brokers are not sounding the death knell just yet. While lockdowns across the world threaten office values and many rental payments will be missed, they are still counting on global firms chasing trophy headquarters.

The industry is also betting that being home-bound has made people appreciate human interaction even more, which will sustain demand.

Still, what bank executives say matters. Wall Street lenders are among the largest tenants in the global commercial property industry, with many housed in large open-plan skyscrapers that rely heavily on elevators.

The near term may bring more pain to the real estate market: almost eight million UK workers will be unable to return to their offices in the months after their lockdown eases, broker Colliers International Group said this week.

In any case, bankers should prepare their home offices for the long-haul.

London-based Standard Chartered chairman Jose Vinals last week suggested that staff at its sprawling global operations keep staying at home.

"One thing is for sure - after this crisis is over we may have to rethink our work-from-home practices," said Mr Vinals. "The experience so far has been rather good. It may be that going forward you don't need to have 100 per cent of the people in the office, 100 per cent of the time."

Deutsche Bank's Mr Sewing seems to have come to similar conclusions.

The last four weeks "have shown us opportunities to cut additional costs," he said in a conference call, after reporting earnings on Wednesday. "If we look at our travel costs, if we look at our entertainment costs, if we look at the real estate costs, all this is under way."

Societe Generale CEO Frederic Oudea recently estimated that about 20 per cent of the bank's workforce will continue to work from home after the crisis.

A spokesperson said the bank will be taking government advice and it is too early to assume how many workers will return to offices.

Companies around the world have sent staff home as the pandemic prompted governments to halt the virus's spread by enforcing lockdowns.

In banking, working from home can be complicated by technological demands; on Wall Street, many staff have been sent home, but there have been tensions as some traders are urged to come to trading floors.

"We have proven we can operate with no footprint," Morgan Stanley's Mr Gorman said in mid-April. "Can I see a future where part of every week, certainly part of every month, a lot of our employees will be at home? Absolutely."

Citigroup, which operates in more countries than its rivals, has cautioned employees to expect a slow, gradual return with no set dates.

JPMorgan Chase said it might station attendants outside elevators to help push buttons, so fewer workers need to touch keypads.

Goldman Sachs Group is exploring ways to open doors without contact, possibly with towelettes that can be used to touch handles and then discarded on the other side.

As Barclays studies how employees will return to the workplace, Mr Staley warned the process would be gradual, with Hong Kong being the first office to see employees return.

The bank had almost 1,000 branches at the end of last year, and Barclays says 655 of them are currently open. BLOOMBERG