Banks in the UK and Europe plan to reduce business travel after the pandemic

Europe’s largest banks predict a definitive reduction in business travel from pre-pandemic levels following the reversal of the coronavirus crisis, as many new ways of working remotely developed during the closure become commonplace.

Senior bankers are keen to learn from last year’s lessons to reduce costs and consolidate green credentials, but plans will be worrisome for companies and hospitality groups that rely heavily on profits on business trips and hope to recoup the cuts once. they rise.

Noel Quinn, chief executive of HSBC, told the Financial Times that he hoped to reduce Covid’s subsequent travel by making fewer and longer trips to the lender’s international hubs to lower the number of flights required.

The UK Lloyds Bank Group and ABN Amro Bank of the Netherlands, meanwhile, have become two of the first major lenders to set formal issuance targets for the entire bank. Lloyds pledged to “sustain the momentum” generated during the pandemic by keeping carbon dioxide emissions from travel less than 50 percent by 2019.

ABN aims to halve air travel over the next five years compared to 2017, in part by banning bankers from flying between European offices and forcing them to take the train.

For example, to hold an hour-long meeting and return. These things will disappear.

Airlines and hospitality groups could be a savage blow. The business class is one of the most lucrative sources of income for some companies, and some international hotels and hospitality groups, such as restaurants and bars, make their profits from executive functions and events for winning businesses.

PwC says corporate travel can generate up to 75% of airlines ’revenue on some international flights.

It also weakens the predictions of some industry leaders, such as Ryanair CEO Michael O’Leary last week’s forecast business trips would make a full recovery from the crisis.

For domestic banks, such as Lloyds, for example, reducing travel can be quite easy, although face-to-face meetings with business customers and foreign investors will have to be reduced. However, international investment banks also anticipate significant reductions.

A senior official at another bank that conducted operations in several countries said his bank had yet to set a final goal, but was also considering limiting the trip to “half the pre-pandemic practice.”

Andy Halford, chief financial officer of Standard Chartered, although headquartered in London, did most of its business in emerging markets, was more cautious than some members, but still expected the bankers ’move to be lower than a third earlier. pandemic.

“For meetings with investors to update, road shows around the world, I hope these things will be reduced. Many investors can take so much more in the video. But councils with a lot of staff, important executive meetings… That will have to continue. Moral impact is worth the effort. ”He said.

The one-third drop would be in line with forecasts made by Jeff Alliance CEO of the Goh Star Alliance, but other airlines expect the fall to be less severe. Shai Weiss, Virgin Atlantic the CEO told the Financial Times this month that the company wanted to be 20 percent successful in the long run, while O’Leary was even better.

Several senior bankers said they were keen to start some types of travel again, such as visiting staff and key customers, but realized that by 2020 many of the trips made in the past had been proven to be superfluous.

“I think people don’t necessarily see it as doing everything they used to do,” said one senior investment banker. “Flying and coming back for an hour-long meeting, for example. Those things are going to go away.”

Maintaining some of the remote work habits developed in the pandemic provides an easy opportunity for banks to reduce costs at a time when they are struggling to achieve sustainable profitability in times of low interest rates. HSBC alone saved $ 300 million in travel costs by 2020 compared to the previous year.

The slowdown has also reduced the bank’s annual CO2 emissions by around 73,000 tonnes. Although the biggest contribution banks make to climate change comes through them lending to highly polluting industries, passenger-related emissions are a material part of the direct carbon footprint.

FT estimates that a 50 per cent drop in passengers at the UK’s four largest banks compared to 2019 would save around 120,000 tonnes of CO2 emissions each year.