The big New York City-based marquee investment banks, such as Goldman Sachs, JPMorgan and Morgan Stanley, have required workers to return to their respective offices. This edict bucked the overall corporate trend of providing hybrid, remote and flexible work choices.

Jefferies, an investment bank located in Manhattan, with around 4,500 employees worldwide, reported over 40 new Covid-19 cases in December—with 10 on Tuesday. Peregrine “Peg” Broadbent, the bank’s chief financial officer, previously died from Covid-19 complications back in March 2020.

Reuters reported that CEO Richard Handler wrote in a memo, “Our priority now is to best protect every one of you and your families.” Handler continued, “Effective today, we are canceling all social events and entertainment until January 3rd.” Staff was asked to return home. Moving forward, the company is also requiring a mask mandate in all of its offices, even for those who are already vaccinated.

It may feel easy to fault banks for ordering their teams to return to an office setting. To be fair, they may have some valid reasons. Banks and brokerage firms are held to strict regulatory requirements. Maintaining a distributed workforce could be challenging from a compliance and supervisory perspective. All you need is one rogue broker or trader and the firm could be dealing with a huge public relations disaster, as well as substantial fines levied by regulators for not appropriately overseeing their bankers, brokers, money managers and traders.

Another rationale could be that the securities industry in New York City is a big employer, contributing a large amount of tax revenue, while the tens of thousands of workers support an ecosystem of restaurants, bars, shops, gyms and an array of other businesses. If everyone worked remotely, it could cause the closure of many small businesses.

New York has seen a large increase in crime lately. With fewer people in the City, people will feel like easy targets. Potential workers, tourists or those who were thinking of going into Manhattan may elect to avoid taking the perceived risk.

The fear could be contagious, creating a downward spiral. Back in the mid-1970s, the Big Apple experienced this downturn. Things became so bad that the largest city in the U.S. had to beg then-President Gerald Ford for a bailout, as the “city that never sleeps” risked going bankrupt.

Forbes previously reported that uncertainty over the new Omicron variant may cause companies to reconsider their return-to-the-office plans.

If this strain spreads, workers would likely protest over being required to commute back to an office. Businesses will be concerned over legal liabilities, if they force their staff to commute via bus, train and mass transit into the city—possibly endangering them.

Along with Goldman, Morgan Stanley and JPMorgan, a large number of investment and securities firms have been bringing back bankers. This unfortunate breakout may now make other financial services firms based in New York and other large crowded cities reevaluate their plans.

Source: Forbes