Posting of cargo in London? Big banks prepare for blackouts with SA lessons

Some of the largest banks in the world are dusting off their contingency plans to protect themselves from possible power outages in London this winter.

According to commercial body UK Finance, which is coordinating discussions, banks are holding regular joint talks and reviewing plans to use off-site offices or encourage work from home. Companies are also studying the experience of South Africa, where load reduction is part of daily life.

“All companies, regardless of size, are paying close attention,” Andrew Rogan, UK Finance Director of Operational Resilience, said in an interview. “There is no sense of panic, just everyone is making sure their ducks are lined up.”

The renewed attention comes in the midst of a global energy crisis, raising concerns that disruptions could occur as temperatures drop. These fears are particularly acute in Europe, whose energy needs have long been supported by Russian gas.

The UK has been planning for several days over the winter when cold weather could combine with gas shortages, leading to organized blackouts for industry and households. France plans to ask households, businesses and local governments to reduce energy consumption to avoid rolling power outages, while Germany will nationalize the gas giant Uniper to avoid a collapse of its energy sector.

It means that the largest financial companies need continental contingency plans. A JPMorgan Chase & Co. executive said this month that it has electrical contingency plans for all of its locations. The large offices have backup generators and there is also the possibility of temporarily moving personnel between countries in the event of an emergency in one, Germany’s chief Stefan Behr said at a conference in Frankfurt.

According to UK Finance, in the UK, lenders, construction companies and branches of foreign banks are all taking part in the discussions. Representatives from companies including Goldman Sachs, Citigroup, Bank of America, HSBC and BNP Paribas declined to comment when asked about their preparations.

Major companies already have additional generators and power sources that can supply them for at least 72 hours typically, according to UK Finance. They are also looking for off-site locations in London, Essex, Surrey and elsewhere that could potentially escape localized blackouts. Experience dealing with Covid-19 and potential adverse weather conditions mean companies are well prepared, Rogan said.

The crisis is also pushing banks to try to reduce dependence on fossil fuels. The company eEnergy, which manages the energy strategy for several hundred buildings in the City of London, has seen a “huge surge” in the past three months of financial institutions trying to hit net zero given the problems in the energy market, he said. the Group Chief Executive Officer Harvey Sinclair.

“Energy prices have almost reached the same level as rent costs,” he said. “We are installing smart meters and identifying if the lights are left on at night and if the air conditioning units are on too much.” The company also advises customers on backup installation through on-site battery storage and off-grid solar panels.

In Switzerland, UBS Group AG has decided to fluctuate the temperature in its offices more strongly to reduce energy consumption. Danish banks are handing out blankets to help staff cope with cooler office temperatures, while Deutsche Bank AG told employees this summer that it will cut off air conditioning and turn off hot water in its offices this summer. Germans.

Backup generators

Data centers, a key element of financial plumbing, are also making sure they are protected. Telehouse Europe, which has servers for over 800 bank and insurer customers across five locations in London’s Docklands, is increasing its levels of crisis management and is constantly communicating with fuel suppliers.

“We sincerely believe that the risk is minimal and we have assurances from our suppliers that it will not happen,” Mark Pestridge, a senior director of the company, said in an interview. He added that the company has backups for its 1.5 megawatt multiple generators. “We are part of the critical national infrastructure, which means we have priority in a time of fuel shortage.”

Preparations come after Canary Wharf faced days of power problems in March after a fire knocked out a substation, disrupting the offices of Citigroup, HSBC and Morgan Stanley. Nerves were further shattered in July as parts of London neared a blackout as rising electricity demand collided with a bottleneck in the grid.

The problems in the United States underscore how banks around the world must manage these risks. The Texas grid collapsed in 2021 during the cold season, leaving millions of people without electricity for days. California has come close to such a situation in recent weeks during extreme heat.

Lessons from Johannesburg

Banks in South Africa, which is suffering from severe power outages, have a lot of experience with these challenges.

Since 2008, Investec South Africa has installed multiple UPS systems and backup diesel generators to primarily protect its internal data center, according to Investec Chief Operating Officer Stuart Spencer. The company hires three electrical engineers on site in Johannesburg and has diesel to cover the days of power outages. Testing systems in advance is crucial.

“Your data center is critical to the bank’s survival,” he said in an interview. “If the air conditioning fails, servers can overheat, shut down uncontrollably, and resetting them is a nightmare.”

Gianluca Pescaroli, Professor of Business Continuity and Organizational Resilience at University College London, said any disruption to banking services would represent a major disruption given the ubiquity of cashless transactions. “My main concern is not the bank itself, but that it is in a universe of third-party suppliers or customers and that it can fail, causing a cascade effect,” said Pescaroli, who advised the Greater London Authority in the event. of power outages.

Lenders need to do more stress testing and staff training and examine the networks and the building the bank is in, he said. “There is resilience, but not enough”.

– With the assistance of RenĂ© Vollgraaff.