Three of Britain’s biggest banks have announced plans to dump expensive office space, a bet that remote work is here to stay even after the pandemic ends.
Lloyds (LLDTF) said Wednesday that it aims to reduce office space by about 20% by 2023, while Standard Chartered (SCBFF) confirmed Thursday that it intends to downscale by a third over the next three to four years.
“The pandemic has accelerated trends in employee expectations and the shift towards more flexible working,” Lloyds said in its earnings announcement.
The moves come as millions of office workers around the world have adjusted to working from home after nearly a year.
Childcare and long work hours continue to present a challenge as the pandemic drags on. But many companies believe they’ve ironed out kinks in communication, and no longer view productivity as a major concern.
“We learned that our people could be just as productive working from home as in the office,” HSBC said in its earnings statement.
A ‘hybrid’ way of working
HSBC will decide whether to keep offices as leases run out. But the cuts won’t affect bank branches or its headquarters in London’s Canary Wharf, where many top financial institutions are located.
“We will have the building at Canary Wharf. This will be the primary office but the nature of working in the office will change,” CEO Noel Quinn said Tuesday during a call with reporters. He expects HSBC to adopt a “more hybrid model” of working in the years to come.
Standard Chartered, which like HSBC is based in London but focused on Asia, announced last November that it plans to offer flexible work plans to 90% of global staff by 2023.
But some bank executives remain skeptical that the changes brought about by the pandemic will last. Goldman Sachs (GS) CEO David Solomon said Wednesday that he saw working from home as a “temporary thing.”
“I do think for a business like ours, which is an innovative, collaborative apprenticeship culture — this is not ideal for us. And it’s not a new normal,” Solomon said at an industry conference. “It’s an aberration that we’re going to correct as quickly as possible.”
Any shift to more permanent remote work could have major ramifications for the economic recovery in urban centers, which have long relied on commuters to support local businesses and transportation services.
Central London and Canary Wharf accounted for over half of London’s economic output in 2017, and more than one-tenth of the output for the United Kingdom as a whole.
Government economists have estimated that central London lost out on £1.9 billion ($2.7 billion) in spending from commuters in 2020.
It’s not just a potential problem for London. Earlier this month, Salesforce (CRM), which is based in San Francisco, said most employees will come into the office one to three days per week when it’s safe to do so, while some workers will be permitted to go fully remote.