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
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
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
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
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
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
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
"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
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
- 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.
- 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.