PUBLIC RELATIONS: Financial PR deals with times of crisis - As an economic slowdown looms large, financial firms are relying on PR agencies to smooth over troubled times

While many still struggle to comprehend the human cost of the

terrorist attacks on the US, September 11 also marked a black day for

the financial markets. With billions of pounds wiped off the FTSE 100

Index over- night, London's financial PR community was left stunned.



Barclay's Stockbrokers decided to cease all media comment for the first

24 hours after the attacks. "It was not just the scale of the disaster

and the confusion. We felt there was no appropriate comment we could

make.



It was not until the Wednesday morning that we were prepared to speak to

the media," says Hilary Cook, director of investment strategy for the

financial services provider.



Some of the shine had already gone from the City before the events in

the US. With economic downturn in the air, inevitably the number of

share offerings, mergers and acquisitions had fallen throughout

2001.



But the US tragedy and the resultant threat of global warfare had small

investors panic-selling, while the big players slammed the brakes on

their top-end deals.



In the immediate aftermath, Fidelity Investments, which manages £16bn of private savings in the UK, made concerted efforts to encourage

institutional and retail customers to think long term. On the telephone,

in prepared statements, customer letters and ads, the fund managers drew

parallels with the Gulf War and produced diagrams showing how the

financial markets survive global wars.



"We took a careful tone, as we didn't want to assume that everyone was

simply thinking about their money. But we didn't want people to

overreact and wreck their long-term future by selling out, going to cash

and sticking it under the bed," says Paul Kafka, Fidelity's executive

director in charge of corporate communications.



But while the markets have now steadied, many feel financial PR is a

changed world.



Relying on technology



With some analysts, investors and journalists nervous of stepping onto

an aircraft or into tall buildings such as Canary Wharf, the events have

accelerated the financial PR sector's adoption of web-based

communications.



For example, companies such as Orange and British Airways, are providing

simultaneous webcasts and real-time information on their investor

relations web sites.



The US tragedy has also brought communications issues to the fore,

including those of corporate responsibility and corporate governance.

"If you look at firms that had problems with mismanagement before

September 11, once economic difficulties kicked in, everything happened

much faster," says Stephen Benzikie, director of financial

communications at Edelman PR Worldwide.



Certainly, some in the airline industry were swift to crumble and

troubled telecoms equipment giant Marconi plunged from disastrous to

worse, following the September crisis in the markets.



Indeed, Marconi provided a salutary lesson on how to get financial PR

completely wrong. With a baffling saga of false confidence, suspended

shares, ill-timed profit warnings and management departures, Marconi

squandered shareholder value from 1250p in 2000, to below 29p come

September 6, 2001.



International PR networks gamely suggest they are riding out this

economic storm by looking beyond financial calendar management and chief

executive positioning. But cutbacks in the City have also been matched

by a large number of redundancies. Even Brunswick, which according to

online merger and acquisition intelligence tool Mergermarket.com, tops

the City PR cross-border deals rankings for EMEA, recently axed five

client-facing employees.



But others claim short-term gains, requiring extra manpower. "Business

doesn't necessarily depend on economic prosperity. Often client demands

increase when things are not going well," says Angus Maitland, chairman

and chief executive of The Maitland Consultancy, whose company is

helping Equitable Life through troubled times.



Predictably, most financial PR firms remain confident that the big

business will return in force next year. "It's important not to lay off

financial PR staff at the moment, because hopefully there will be a

flurry of activity next year, or at least by the second quarter," says

Anthony Payne, managing director of Hill & Knowlton's financial

practice.



In fact, a number of large deals are on the table. Hill & Knowlton is

working on German firm RWE's bid for American Waterworks, while Gavin

Anderson is spearheading an inv-estor and media relations programme for

Icelandic retailer Baugur.



As Alex Sandberg, chief executive of corporate and financial PR agency

College Hill says: "Markets will recover, we know that. The important

thing is not to be a rabbit caught in headlights, but be creative and

proactive. Advisers who simply act as gate-keepers or find reasons not

to do things will get fired."



HOW THE FSA TRIED TO PREVENT PANIC IN THE CITY



The Financial Services Authority (FSA), is the most powerful financial

regulator in the world, with a remit even wider than that of the

Securities and Exchange Commission in the US.



In the immediate aftermath of the terrorist attacks, the UK's financial

watchdog had the unenviable task of preventing full-scale panic in the

City.



"On September 12, the first thing we did was reassure the financial

firms, markets and consumers that it was business as usual," says FSA

head of media relations Vernon Everitt. In a joint statement with the

Bank of England, the FSA advised authorised firms "wherever possible, to

operate normally", and told consumers, "There is no major disruption to

the UK financial system."



At the same time, the regulator established a section on its web site,

dedicated to informing audiences of developments in the US as they

impacted on markets at home and abroad.



"The third step that we took involved talking to the media and getting

on the telephone to firms to ask them if they needed help," says

Everitt.



This included offering assistance to those financial institutions that

had lost people and whole trading floors, and needed to switch

operations to the UK.



In the longer term, the FSA tried to stabilise the markets by

temporarily relaxing the rules that were forcing life companies to

continuously dump equities in order to match assets to liabilities.



TIPS FOR HANDLING A FINANCIAL CRISIS

DON'T

- Leap before you are certain of the facts.

- Speculate on the implications.

- Exude false confidence, it smacks of deviousness or incompetence.

- Ignore the investor relations web site

- Forget that for the news media, people, the environment and property

always come before money.

DO

- Develop and test a crisis plan.

- Keep analysts, investors, employees and the media informed.

- Think carefully about the timing of announcements.

- Be prepared to address possible regulatory issues.

- Set clear financial goals for the future.



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