Covid isn’t killing corporate entertaining – it’s dead, anyway

Attending a boozy after-work gathering can lead to a whole heap of trouble. Just ask Boris Johnson, the UK’s embattled prime minister. In recent weeks, whistleblowers have painted a picture of a raucous, alcohol-sodden culture in the UK’s corridors of power, with cries that different rules seem to apply for the wealthy and influential.

But in the world of finance – once famed for its largesse – the party seems to be winding down.

In days gone by, entertaining a group of bankers might have meant a round of golf at Winged Foot, then a meal at a Michelin-starred restaurant washed down with a few bottles of Romanée-Conti.

Such practices are increasingly out of step with bank compliance policies. These days, a client lunch is more likely to involve a mediocre restaurant with passable wine – increasingly, with those present paying their own way. Invitations to expensive restaurants or marquee sporting events are more likely to be met with angst than excitement.

In the world of finance – once famed for its largesse – the party seems to be winding down

“Some banks have policies that staff can’t accept anything totalling more than, say, $100 per year – so that could preclude dinners or tickets to sporting events,” sighs the head of one vendor. “Banks are under a lot more scrutiny now, and have written guidelines. With some, if I wanted to take a banker out for lunch, they had to get it approved by their manager and their compliance department.” Approval that is increasingly given in writing, another vendor adds.

He puts at $120 the cash value of all entertaining that individual bankers may accept from all vendors in a year, including all expenses – a sum he calls “almost negligible”. He adds that some dealers also apply “additional policies to ensure that the vendor providing such gifts is not under consideration for any new business”.

Some argue that change is overdue, and is, in part, generational. Showy opulence became socially unacceptable for bankers after the financial crisis: multi-thousand-dollar bar tabs and free tickets to sporting events is a world that many junior bankers don’t know.

Regulatory scrutiny has played a big role. Lavish corporate entertaining was made harder by the introduction of the UK’s 2010 Bribery Act, which heavily restricts offers of hospitality with the intent to “induce a person to perform improperly a relevant function or activity”.

The buy side has also had the brake put on its own client outings. The UK’s Financial Conduct Authority followed up its 2014 regulations on excessive gifting and hospitality with a thematic review of inducements and conflicts of interest, the first finding of which suggested invitations to play golf were “not conducive to business discussions”.

Senior bankers say Covid has also hastened change – and, while some lament its passing, many don’t. The chief information officer at one large US financial firm says he no longer wants to spend his free time “hanging out with some stupid vendors” if they want to take him to a football or basketball game, preferring to spend more time with his family.

Bankers determined to accept their drinks invitations can always look to the UK prime minister’s example, and, if they get hauled up for failing to declare their attendance, claim they were unaware they were at a party.