What Should Banks be Doing to Respond to COVID-19?

The World Health Organization’s declaration of COVID-19 as a pandemic in recent days, as well as the increase in number of worldwide and American cases, is causing banks and other financial service companies to implement aspects of their pandemic plans. At times like these, regulators are concerned not only with the safety and soundness of financial institutions but also with communities being able to access credit and banking services. On March 9, 2020, banking regulatory agencies issued the following joint statement: 

“Federal financial institution regulators and state regulators today encouraged financial institutions to meet the financial needs of customers and members affected by the coronavirus. The agencies recognize the potential impact of the coronavirus on the customers, members, and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. Regulators note that financial institutions should work constructively with borrowers and other customers in affected communities. Prudent efforts that are consistent with safe and sound lending practices should not be subject to examiner criticism. The agencies understand that many financial institutions may face current staffing and other challenges. In cases in which operational challenges persist, regulators will expedite, as appropriate, any request to provide more convenient availability of services in affected communities. The regulators also will work with affected financial institutions in scheduling examinations or inspections to minimize disruption and burden.”

As banks seek to maintain the necessary level of service to their communities, it’s important to remember what pandemic plans should include. The FFIEC Interagency Statement on Pandemic Planning reminds financial institutions that pandemic planning differs from business continuity planning and that impacts from pandemics can be very difficult to forecast. Accordingly, plans should provide sufficient flexibility to address a wide range of possible impacts.

Pandemic plans should provide for:

• A preventive program to reduce the likelihood that operations will be significantly affected
• A documented strategy that allows for scaling efforts to meet the effects of a pandemic outbreak
• A comprehensive framework of facilities, systems, or procedures to enable the institution to provide critical services if large numbers of employees are unavailable
• A testing program to ensure plans are effective
• An oversight program to ensure ongoing review and updates of the plan to ensure they remain effective

The Interagency Statement requires plans to follow a cyclical process of planning, preparing, responding (which is the phase we are currently in) and recovering. Senior management from all functional, business and product areas—including administrative, human resources, legal, information technology support, and key product lines—should be involved in addressing pandemic events, and plans and responses should be overseen by the Board of Directors.

Finally, the Interagency Statement provides the following risk management actions to be considered in pandemic planning and responses.

• Communication and coordination with third parties, such as critical service providers, business and community working groups and coalitions, local public health and emergency management teams, local and state agencies, and customers
• Employee protection strategies to help reduce the risk of contracting the illness, and steps to consider such as:
  • Publicize CDC programs for reducing risk of illness and other general hygiene programs
  • Encourage employees to avoid crowded places and public transportation systems
  • Implement social distancing techniques to minimize typical face-to-face contact through the use of teleconference calls, video conferencing, flexible work hours, telecommuting, ATMs, drive-up windows, and encouraging customers to use online or telephone banking services
• Remote access, to enable employees the ability to perform critical tasks while reducing the likelihood of contracting or spreading an illness

If you are seeking assistance in response to COVID-19 and how to better prepare, contact a Weaver professional today.

The FDIC’s Coronavirus (COVID-19) Information for Bankers and Consumers can be found here and provides additional articles and links that may be useful to bankers as they manage their institution’s response to the COVID-19 event.

© 2020