On May 2020, Ben Arnott of the Energy & Utilities Business Committee hosted a panel of Banking and Financial sector specialists to discuss the challenges of the Energy sector. Panellists included Nikki Kemp, World Economic Forum - Sustainable Development Investment Partnership ASEAN, Richard Michael, UK Export Finance, Galid Lahdahda, Standard Chartered Bank, and Jackie Surtani, Asian Development Bank.
The webinar is now available for replay and forms part of BritCham’s ‘Road to Net Zero’ initiative. Setting the scene, Ben introduced a world where changes to the nature of work have been accelerated due to the measures imposed during the pandemic. A new era of banking and finance, reshaped by fintech, was already upon us, and a total re-imagining of the energy sector was already well underway, ably supported by many banks and Financial Institutions.
While global growth may have to take a backseat, banks and financial institutions will have an important role re-establishing trade, financing re-development activity, and restoring normality in society. This will require real tenacity within financial institutions, advising their clients on rarely confronted issues and maintaining extreme discipline in capital allocation. A renewed focus on infrastructure development seems likely, with a shift of focus towards different asset classes already predicted. The continuation – or acceleration – of the drive to decarbonise the economy is already gathering significant support. Further, on the human capital front, it is expected that different skill sets and capabilities in banks and financial institutions will be required in the future.
Unlike the Global Financial Crisis, COVID has led to a double whammy with an ‘all-hands-on-deck’ approach to business continuity across all sectors. Health, safety and well-being of workers and general populations are at the forefront of governments’ minds and actions.
Multilateral financial organisations moved quickly with multibillion-dollar packages, which soon multiplied as the crisis grew. Focus was initially on welfare and hospitals, and the second focus on PPE, supply chain and essential infrastructure.
Business did not completely stop; banks had a flurry of activity around supporting customers and clients facing liquidity crisis. They are now reviewing new businesses with more scrutiny, applying multiple sensitivities on models. New projects are being supported across the board. A lot of support from governments have held off insolvencies. If they run out of fuel, there could be a second wave of financial impact with need for protection from defaults and a second round of emergency liquidity.
Let's Discuss...
Will the Energy Transition
Remain a Priority?
Financial Aid Post COVID-19
Contributed by the Financial & FinTech Committee, and Tim Rockell, Chair of the Energy & Utilities Committee
In 2019, climate change was front and centre of global political debate.
We entered 2020 anticipating engaging dialogue in the lead-up the
United Kingdom’s hosting of COP26. The United Nations Climate
Change Conference is now postponed by a year and priorities have
shifted as we enter the second half of 2020.
EXPERT OPINION FROM OUR COMMITTEES
Whilst the
banking sector appears to have learned the lessons of the GFC, it is uncertain how long the crisis will continue to impact credit, put pressures on the capital of banks and how they will adjust allocations to existing loans.