Europe’s economic lifeline faces the risk of power cuts

European banks, the lifeblood of the region’s economy, have generators ready, reducing the use of lights before the risk of power outages in the winter.

In the context of Russia tightening gas supplies to Europe, major banks in the continent are experimenting with a series of measures to deal with the scenario of rotating power outages, potentially threatening the monetary system. foundation of the regional economy.

Theo Reutersmany banks are preparing backup generators, to keep ATMs and online banking uninterrupted during prolonged power outages.

The situation is especially urgent for financial companies, since payments and transactions are of considerable importance to the European economy, which is already vulnerable to the effects of the Russia-Ukraine war.

A general view of the Canary Wharf financial district in London, England, on April 25, 2021.  Photo: Reuters.

A general view of the Canary Wharf financial district in London, England, on April 25, 2021. Image: Reuters.

Experts say that European banks have adapted well to the blockade orders to prevent Covid-19 and the requirement to work remotely to combat the epidemic, but cutting power or allocating energy according to norms is a very challenging challenge. other.

“Banks are part of other systems,” said Professor Gianluca Pescarolo, an expert at University College London (UCL). “I am concerned about the ripple effect on society when ATMs stop working or banks fail to conduct non-cash transactions. Banks also depend on other services such as the Internet.”

Regulators are also on high alert. The European Central Bank watchdog and Britain’s Safeguards Authority (PRA) both require banks to have a plan to deal with the risk.

Banks in the UK must identify “business-critical” services and how to address vulnerabilities in the face of a power outage scenario.

Depending on the severity, JPMorgan’s London, UK and Frankfurt, Germany branches could switch to diesel generators to keep critical facilities running for a few more days. .

In addition to operating a British consumer bank, JP Morgan also plays an important role as the US bank that lends money to companies in Europe the most, as well as trading stocks and bonds.

UniCredit, Italy’s second largest bank, also tested its ability to respond to emergency scenarios this summer, with a focus on the ability to restore data processing in the event of a power outage. UniCredit’s two core data centers are connected to two separate power stations, but it’s unclear how long they can maintain power.

Euronext, which operates the French and Italian stock exchanges, said it had reassessed energy use since the outbreak of the war in Ukraine and installed backup generators, but did not elaborate. detail.

In addition to preparing a backup power source, European banks are also taking savings measures to prevent the energy crisis, such as reducing office space and concentrating staff in fewer working buildings.

Deutche Bank, Germany’s largest private bank, has ordered 1,400 branch buildings nationwide to turn off hot water in toilets, regulate workplace temperatures, and turn off auxiliary lights and outdoor billboards at night. . The fountain at the headquarters in Frankfurt also stopped working.

This plan is said to be able to save 4.9 million kWh of electricity per year, enough to power about 49,000 light bulbs operating for an hour.

France’s largest bank BNP Paribas is also adjusting power consumption in the approximately 2,750 operating branches, offices and data centers across France, Belgium and Italy. This bank also closely monitors the ability to cut electricity consumption, which is mentioned continuously in the business plan.

Pipelines that deliver Russian gas to Europe.  Click on the photo to see details.

Pipelines that deliver Russian gas to Europe. Click on the photo to see details.

However, experts are concerned that despite preparing contingency scenarios, very few European banks can cope with the scenario of power outages for more than a few days.

“This situation presents a serious flaw in planning,” said Avi Schnurr, CEO of the Electrical Infrastructure Security Council. “Banks need to make arrangements to ensure the ability to cope even during prolonged blackouts.”

European gas prices surged after Russia’s Gazprom announced indefinite closure of Nord Stream 1, a key gas supply to the region.

Nord Stream 1 is the largest gas pipeline from Russia to Germany via the Baltic Sea, transporting about 55 billion cubic meters of gas per year. Since July, Nord Stream 1 has been trickling at 33 million m3/day, equivalent to 20% of maximum capacity, with the reason given by Russia that some turbines have technical problems.

European officials accuse Russia of weaponizing energy in retaliation for sanctions from the West. Moscow denied, saying that the wave of sanctions was the main reason for the increase in gas prices.

In the event that the energy crisis in the winter takes a turn for the worse, European banks and financial companies will have to take more drastic steps such as using only certain floors of buildings and closed some services such as gyms for employees, an insurance industry official on the continent said.

Duc Trung (Theo Reuters)

Leave a Comment