From a sales and trading perspective, the initial effects of COVID-19 have centered around fire fighting, business continuity protocols and above all else, the safety of employees.
As the dust settles and gives us a moment to collectively breathe before the second wave potentially hits in September or October, there are going to be some very practical business decisions that need to be made regarding clients. In particular, there needs to be an urgent rethink about regional client coverage models.
Coverage models vary by bank and region. Historically, most U.S. banks' clients in U.S. markets have been covered by a local sales desk. In Europe, it's split - some banks favor local coverage but a similar number (typically the European banks) prefer European-based coverage for North American or Asian based clients’ trading Europe. Among Asian banks there's been more of a tendency for Asia-based sales teams to cover a global client base. This set-up holds particularly true for the advisory-biased sales roles (e.g. equity research sales, macro sales etc.).
Can these traditional coverage models continue to function in a world where COVID-19 is an ongoing issue? Can you cover global clients from a single location when business travel is heavily constrained? The answer is almost certainly no.
Over time, then it seems likely that banks will either create (or reestablish) new teams of regional specialists working outside of their home markets. For example, you will find more European market coverage salespeople in New York, and more Asian specialists working in London. This could materially banks' impact hiring needs over the coming quarters.
In continental Europe this trend is being accompanied by Brexit, which has had a similar impact, albeit over a far longer period: banks are already moving local salespeople out of London.
Of course, the other alternative is simply that banks will try harder to move further away from advisory sales models where they can. When clients are using execution-only desks and the relationship is electronic, it doesn't matter where salespeople are located: clients don't expect to meet with them anyway. Expect even more of this in the post-COVID future too.
Harold M Sally is the pseudonom of a veteran salesman in a global bank
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