Some of Europe’s biggest banks are preparing emergency generators and dimming lights as they prepare for possible blackouts and energy rationing that threaten the monetary system that underpins the economy of the region.
As Russia limits the continent’s gas supply, banks are testing how they can cope with power shortages and lining up alternative power sources, such as generators, so ATMs and banking services in line do not go out.
There is a particular urgency for financial firms to act because of the importance of payments and transactions for the European economy, already fragile due to the fallout from the war.
While the sector has adapted to COVID-19-related lockdowns and remote working, blackouts or rationing present a very different challenge. “The banking system is part of other systems,” said Gianluca Pescaroli, professor of business continuity and disaster resilience at University College London, who advised London authorities on power outages. “My main concern is the cascading effects on society of ATM failures or cashless transactions. Similarly, banks’ dependencies on other services like the internet. JPMorgan, which employs thousands of people in the European hubs of London and Frankfurt, ran simulations of power outages, a source familiar with the matter told Reuters.Depending on the severity, the bank could switch to diesel generators that could keep key offices running. working condition for several days, the person said.
The largest US bank lends money to companies in Europe and trades in stocks and bonds in addition to running a UK consumer bank. Italy’s second-biggest bank, UniCredit, tested its operational resilience this summer, a source familiar with the plans said. Its latest disaster recovery test focused on data processing resilience, the source said, adding that the bank’s two main data centers were powered by two independent power plants. It is unknown how long his power would last. Euronext, which runs the French and Italian stock exchanges, said it had reassessed its energy consumption since Russia invaded Ukraine, adding that it had backup generators, without giving further details.
Banks are also taking visible steps to recognize the energy crisis, such as reducing office space and consolidating staff in fewer buildings. Deutsche Bank said it was rolling out a series of energy-saving measures in its 1,400 buildings in Germany, to save 4.9 million kWh of electricity every year – enough to power around 49,000 light bulbs for one hour. The lender shuts off hot running water in restrooms, adjusts the workplace temperature, turns off all interior branch lights, and turns off illuminated outdoor advertising at night. The fountain in front of its headquarters in Frankfurt will also be turned off. Regulators are on high alert. The European Central Bank’s watchdog and its equivalent UK counterpart, the Prudential Regulation Authority (PRA), both require lenders to have plans to deal with disruption.
UK companies are required to identify their “significant business services” and methods of addressing vulnerabilities in the event of threats materialising.
Nevertheless, experts fear that few companies are prepared for long outages of more than a few days. “This represents a serious gap in resilience planning,” said Avi Schnurr, CEO of the Electrical Infrastructure Security Council, a think tank that advises on preparing for such risks.
Banks should already be making arrangements to ensure they can cope even in the event of a prolonged power outage, with agreements for transactions to be recorded retroactively once systems are back online, he said. . BNP Paribas, France’s largest bank, is tackling energy consumption in the approximately 2,750 branches, offices and data centers it operates in France, Belgium and Italy, a source close to the government said. French lender.
The possibility of power cuts was “closely monitored” and covered by the Business Continuity Plan implemented within the bank.
Gas prices in Europe jumped after Russian state-controlled Gazprom said it would extend the shutdown of the main Nord Stream 1 gas pipeline indefinitely.
Europe has accused Russia of militarizing energy supplies in retaliation for Western sanctions imposed on Moscow since the outbreak of hostilities with Ukraine. Russia blames these sanctions for causing gas supply problems, which it attributes to pipeline failures.
In Britain, rising energy costs are straining businesses and consumers, who are facing runaway inflation.
State-backed NatWest said it partially mitigated the financial blow by covering future energy costs.
Major insurers also said they were reducing their energy consumption. Zurich’s Switzerland said it would darken offices at night and dim “decorative energy consumers” like fountains.
If the crisis worsens, the sources said companies would take more drastic action. And while staff may notice it, businesses hope customers won’t.
“Additional measures that can be taken in the event of a worsening energy situation include the use of only certain floors of the buildings and the closure of certain services such as the employee gym,” the insurer said.
Source: Reuters (additional reporting by Julien Ponthus in Paris and Carolyn Cohn in London; editing by Elisa Martinuzzi, John O’Donnell and David Evans)