The COVID Diaries: nonbank financial-institution borrower 3

The following interview is with an Australian-based funding executive at a nonbank financial institution. It was conducted on 8 April 2020.

We are now into the second month of home working. Is cabin fever starting to set in? Do you think we can continue doing business in this fashion for three to six months?

Cabin fever is taking on new meanings. We are being told by federal and state officials that this will be the new norm. It is not just our industry that is having to adjust but all of society.

The way in which technology has enabled business continuity has been one of the few good outcomes. There have been some hiccups but the transition to a full work from home model has been quite good.

Our treasury team is quite accustomed to working from home, whether that is outside of business hours or over the weekend – so it hasn’t been a big stretch. For the broader business, particularly the service and operation areas, it has been a psychological change.

Has your view of the crisis and the nature of the challenges it presents changed? It seems Australia has prioritised public health over the economy, at least in the medium term. How are you thinking about that trade off?

It is fairly clear that the style and intensity of the initiatives the federal and state governments have been rolling out will largely determine the duration and depth of the downturn in the economy. But measures have been largely supported by the central bank.

As it is, I think there is a sophisticated and entirely appropriate approach being adopted by federal and state governments. They have modelling of the spread of the virus and I would like to think there is a point at which they can start to relax some of the containment measures in order to get parts of the economy operating again.

In line with that, financial markets recovery is probably going to be a lot slower – particularly in the credit markets. There will still be an impact on the real economy and it will spill over.

“Since the financial crisis, and particularly over the past few years, markets have been able to understand and price disruptions and major event risk. But this is really the big daddy of them all.”

Are you more or less optimistic about the crisis than you were during the early acceleration period of moving to home working and adding social distancing measures?

There seems to be an understanding of the health problem itself but also the ramifications to the real economy and financial markets. There is still a long road ahead to recovery, at the level of the curve as well as the economy, but it seems to be more of a known problem than it was 2-3 weeks ago.

How do you think things will be different when we get back to normal? What changes can you see to work practices, social changes and the economy?

At the society level, hopefully we will be nicer to each other. I think there has been a noticeable shift even among families being more supportive of one another. As far as the work environment is concerned, it has been a great test for flexible working arrangements and that will have a strong legacy once the recovery comes through – which is a positive.

For markets, I would like to think that they will be more resilient. Since the financial crisis, and particularly over the past few years, markets have been able to understand and price disruptions and major event risk. But this is really the big daddy of them all.

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