Luxembourg’s financial regulator is urging banks to heed its warning to send staff home before it battens down the hatches for the expected economic shock waves of the Covid-19 virus.
While most Luxembourgers are in lockdown, a number of banks in the nation’s financial hub have continued to demand some workers turn up at their offices, potentially undermining efforts to contain the virus’s spread, Claude Wampach, director for banking supervision at the Commission de Surveillance du Secteur Financier, said in a phone interview.
The immediate “priority for the country at the moment is to be able to manage this health crisis,” Wampach said. Banks should “send all people home unless there are compelling reasons to have them on-site,” he said.
The next challenge at this “delicate moment” will be to protect the financial stability of lenders and prevent the deteriorating macroeconomic outlook from sparking a banking crisis, said Wampach, who is a member of the European Central Bank’s supervisory board. He said that’s also being worked on at the level of the ECB.
The situation in the Grand Duchy, the second-biggest fund market outside of America, mirrors that of London, where a core band of finance professionals is still having to find their way to the office.
With some 26,000 people employed in Luxembourg’s banks, “there’s a high potential for infections,” Wampach said. A good number of banks now “function with over 90% of their staff no longer working from the office,” but there are a few isolated cases where the CSSF is putting on the pressure to make the switch.
“What we are doing with those individual banks is to explain how they are outliers, that their colleagues have a more advanced set-up. That works,” Wampach said.
The Luxembourg Bankers’ Association said banks “are doing everything in order to ensure” that the greatest possible number of people work from home. Some bank branches have to remain open, with a minimum number of staff, “to continue to serve customers — often on an appointment-only basis,” the group said in a statement.
“Where home working is not possible, teams are split so that they are working from different locations, or on different days, to ensure continuity of service,” the association said.
Meanwhile, the CSSF said it is prepared to make some concessions, telling banks that there’s some leeway, such as on deadlines for their regulatory reporting. There are also security issues in having most staff work from home.
“Our signal is to say, yes there are risks in working from home, but that shouldn’t prevent home offices given today’s readily available means to secure working remotely,” Wampach said.