After a weekend of protests that turned to violence and looting, bankers in cities across the United States were faced with a three-pronged agenda of growing challenges: securing their own employees and assets, helping many customers small businesses to recover from their second major economic blow this year and understand how banks can promote long-term socio-economic change.
Jeanne Crain, CEO of Bremer Financial in St. Paul, Minn., Wrestled with them all on Monday. Bremer has closed branches near areas where protests have taken place in neighboring Minneapolis, the epicenter of national anger over George Floyd’s death at the hands of police last week.
Bremer’s $ 13 billion asset has started working to help organizations rebuild the halls of local businesses that have been destroyed “in the havoc and grief of the past few days,” Crain said in an emailed statement. .
The banking sector has a responsibility to contribute to reconstruction, she stressed.
“Racism is rampant in American history and in our culture,” Crain said. “The uncomfortable truth is that for centuries banks have helped promote these racist structures, and that means we have a crucial responsibility, perhaps more than most organizations, to engage in long-term work. to ensure that the systems that once held so many people back give everyone the same opportunity to be lifted up. “
Crain is committed to working with nonprofits, social service agencies and other businesses “with the goal of making a real impact in this area.”
Citizens Financial Group in Providence, RI, was tackling similar problems, but on a much larger scale.
On Monday, it temporarily closed 67 of its 1,000 branches in New York, Pennsylvania, Delaware, Ohio and Michigan. A spokesperson for the company with $ 176.7 billion in assets said branches were damaged in riots or in neighborhoods in affected areas.
Jerry Sargent, Citizens’ corporate banking manager for the Northeast region, said bankers also spent much of the day talking to small business owners who now have to deal with not only the devastating economic impacts. from the coronavirus pandemic, but also to property damage. He said many business owners who have reopened or are about to do so – and whose buildings have been damaged – are suffering.
“The very organizations whose revenues have evaporated [in March] are the most susceptible to the riots and violence we’ve seen in recent days, ”Sargent said. “It now makes it difficult for them to reopen, because not only do they need a little working capital to restart…”
Sargent wonders if some small business clients will eventually decide enough is enough.
“I’m afraid some people might say, ‘So I think this creates a fair amount of apprehension in the business community, especially for those who operate businesses aimed at consumers in urban settings.”
Some bankers are already starting to speculate on the need for a whole new round of emergency aid.
Kevin Cummings, chairman and CEO of Investors Bancorp, a $ 26.7 billion asset in Short Hills, NJ – whose branches in metropolitan New York and in New Jersey towns had escaped destruction on Monday at noon – described the video of a white Minneapolis policeman kneeling on Floyd’s neck as his colleagues viewed it as “terrible and tragic” and said “people are rightly upset and protesting”.
However, the burning of buildings and the looting of retailers is appalling, he said. “There are a lot of small businesses that are suffering because of the pandemic,” Cummings said. “It comes just as they’re trying to come back. “
The additional devastation on businesses may require additional loans and grants from the federal government – something akin to the paycheck protection program, he said. Recently the American house pass a new $ 3 trillion coronavirus relief bill with provisions for the economic fallout from the pandemic. As negotiations with the Senate unfold, new forms of emergency aid may be approached in light of the riots of the past few days, Cummings said.
Chris Nichols, chief strategy officer for CenterState Bank, with $ 18.6 billion in assets in Winter Haven, Fla., Agrees. “There is a great need ahead,” he said in an interview. “We might need something that could span a year or more – to bring these companies through 2022 at this point.”
He envisions a modified version of the Small Business Administration’s standard 7 (a) loans – created by banks but largely guaranteed by the government – perhaps extended to more types of businesses and with the potential for a discount. at least partial as was done in the PPP.
“As if these small businesses haven’t had enough trouble already, now their buildings are damaged or destroyed,” Nichols said.
Nichols, who also serves in the National Guard in his home state of California, spent the weekend in Oakland to help control protests and riots there. He witnessed a mix of legitimate and peaceful protests and what he called inexplicable lawlessness and vandalism that resulted in extensive destruction of property and many injuries.
“There was a lot of mess,” he said. “It was really hard to see because these anarchists and looters were going after these small businesses, in many cases, that the protesters were trying to support.”
Banks spent much of Monday trying to eliminate the damage to the retail level and decide how best to conduct their business in the short term.
In La Mesa, Calif., Near San Diego, a branch of Union Bank was set on fire over the weekend.
A spokeswoman said the bank did not appear to be targeted as other banks and businesses in the region were also destroyed. The San Francisco-based banking subsidiary of Mitsubishi UFJ Financial Group in Tokyo has yet to close any of its 340 other branches, but it complies with mandatory individual curfews – including those in effect today in San Francisco, Santa Monica. and Beverly Hills – and close in the event that situations are deemed unsafe.
A new branch that was opened in the Deep Ellum neighborhood near downtown Dallas by the Texas Brand Bank, with assets of $ 228 million, was closed on Monday as windows were smashed . A spokesperson for the bank did not respond to a request for comment.
Citigroup branches in downtown San Diego and New York are said to have suffered riots.
Wells Fargo branches were reportedly set on fire in Minneapolis, Portland, Oregon and Philadelphia, while other sites in California and Georgia were also damaged. All Wells Fargo branches in the city of Philadelphia were closed Monday, some due to damage sustained and others due to safety concerns.
Fires have been reported at JPMorgan Chase branches in Portland, on the outskirts of San Diego and Oakland. A spokesperson for the bank said the company was monitoring its branches and conditions nearby and adjusting its hours as necessary.
US Bancorp in Minneapolis did not immediately respond to a request for an interview on Monday.
Elsewhere, Capital One’s new “cafes” in Portland and Philadelphia suffered damage from the protests, a spokesperson for the company with $ 397 billion in assets in McLean, Va., Said in an email. . The spokesperson said the bank was ready to help small businesses that also needed repairs.
Dallas-based Comerica closed 25 sites Monday “out of caution and added additional security,” a spokesperson said in an email. The company’s $ 76.3 billion-asset headquarters in downtown Dallas was surrounded by doomed stores and restaurants that were damaged in the protests. So far, the bank has not been contacted by any customers whose properties have been targeted by looters, the spokesperson said.
“Over the past few days, we have suffered damage, such as broken glass and graffiti, at eight of our facilities and banking centers across our footprint,” the spokesperson said. “Right now, all of our colleagues remain safe.”
Laurie Stewart, president and CEO of Sound Financial Bancorp, a $ 738 million asset in Seattle, said the company’s Seattle branches and offices were spared the damage, but that it had to many short and long term concerns.
Concerns are growing in Seattle, among the cities hardest hit by the coronavirus pandemic, that thousands of people could lead to a new wave of coronavirus cases in the coming weeks, Stewart said.
“It seems obvious that we will have a peak, and it will be very difficult to follow because these are very large crowds dispersing all over the place at the end of the night,” said Stewart. “I’m concerned that the work we have done” to slow the spread of the virus “will be canceled and we are back to zero point – or worse than zero point if you are a business whose property or facility is destroyed. . “
Even after the physical damage and other immediate consequences have been addressed, daunting challenges in correcting societal and economic inequalities remain.
Initially, peaceful protests late last week “give hope” that Americans want to come together “because we clearly still have an incredible amount of work to do on equality and racism,” said Stewart.
Citigroup CFO Mark Mason, one of the most prominent African American executives in banking, said anger had spread to American streets with “devastating consequences”, sparked by the terror of the murder by Floyd.
“I watched this video of his death with a combination of horror, disgust and anger,” Mason wrote in a Citi blog post during the weekend.
“Racism continues to be the root of so much pain and ugliness in our society – from the streets of Minneapolis to the disparities inflicted by COVID-19,” Mason said. “As long as this is true, America’s twin ideals of freedom and equality will remain elusive. These systemic problems will not go away until we face them head-on. “