When the six staff at the representative office of The Bank of New York (BNY) in Beirut heard that the airport had been bombed and was closed, they knew that the conflict on their doorstep was serious. Shooting and bombing could be heard at the bank’s city centre offices.
The bank immediately activated its contingency plan – devised in the wake of 9/11, but never tested for real. The plan is structured like a pyramid, which can be activated at different levels. It allowed the bank to continue servicing its local customers throughout the crisis. Today, that plan has not only ensured its survival, but it has also cemented relationships with local customers.
Office evacuation
The first step in the contingency plan was the evacuation of its offices located in Beirut’s city centre. Bana Akkad-Azhari, country manager for BNY in Lebanon and Cyprus, says: “Our office was in a strategically sensitive area. Beirut’s downtown had become virtually inaccessible, as it had been cordoned off to make it safer for the visits of foreign diplomats and visiting politicians.
“We decided to move to an alternative location outside Beirut that was a safer environment.”
Staff were relocated to their homes and stayed there for the duration of the crisis. The bank used the internet to establish links between the homes of its staff, so creating a virtual bank scattered around the mountains and suburbs of Beirut. Staff kept regular contact with a BNY security officer outside the country, who was responsible for ensuring their safety.
Immediately upon relocation, the bank contacted all its customers, first checking on their different security situations and then going over their various contingency set-ups.
The bank’s primary goal was to provide client banks with various alternatives to ensure continued secure communication with bank branches abroad, in the event that existing lines were knocked out by an air-strike or power-cut.
The importance of providing various connectivity methods was to allow customers to maintain access and control over their correspondent banking accounts and financial instruments, enabling them to honour their financial obligations and continue to provide banking services to their corporate and retail client base.
Ms Akkad-Azhari says: “The first thing we did was to contact all clients with our new numbers. We checked their status to see how they were handling the situation. As a correspondent banking services provider, the connectivity of our clients to the outside world is essential. So we provided all clients with alternative communications options.
Multiple contingencies
“If one telecom option were brought down, they could operate another, and so remain connected to their business interests and not default on their obligations, which would have hurt the image of the banking sector and its pristine track record.”
Client access to funds and funds transfer services was another concern for the company, which was worried that a hit to the telecoms or electricity system would impair access to the Swift payment system.
Ms Akkad-Azhari says: “We were concerned that they would be unable to access their offices where their servers were located. We gave them a range of secure options from which they could pick and choose so they could continue to [operate]. We did not want the banking sector to be isolated from the outside world.
“We also wanted to be proactive in handling the situation, ensuring the alternative systems were in place long before any need might arise.”
Open all hours
Clients were told that they could contact the bank at any time, day or night, if they needed financial or other assistance. Ms Akkad-Azhari says: “We enabled clients to maintain access to financial instruments so they could provide banking services to their own clients. The banking sector is the backbone of the Lebanese economy.”
The bank did not allow itself to get fazed by the Lebanon crisis, says Hani Kablawi, The Bank of New York’s division executive for the Middle East and Africa region based in the United Arab Emirates. “Our credit appetite for Lebanon was unaffected by the crisis. We kept a close watch on our exposure, ensuring we knew what we were doing when booking additional exposure during the crisis.
“It was important to retain our reputation as a bank committed to the country and its banking sector through good times and bad.”
Risk management in New York was closely monitoring events as they unfolded. Mr Kablawi says: “Risk management was kept well informed on a daily, sometimes hourly, basis. We reviewed and communicated what was happening in the market in general and with the banks in particular, so they always had confidence that we had the situation under control.”
The bank’s staff returned to their city centre offices immediately after the ceasefire, relieved that the contingency plan had worked well, and with a sense that they had been through fire and survived.
