OakNorth Bank PLC: Analyzing COVID-19 Impact and Solution for Bank

This report examines the impact of the COVID-19 pandemic on OakNorth Bank PLC, focusing on the financial challenges arising from monetary policy limitations and the broader effects on the banking sector. It presents a SWOT analysis to identify the bank's strengths, weaknesses, opportunities, and threats amidst the crisis. The report proposes solutions, such as offering subsidized loans and government bond purchases, to address liquidity issues and stimulate economic activity. It also evaluates the impact of these solutions on various stakeholders, including shareholders, employees, customers, and the government, considering both positive and negative consequences like potential inflation. The implementation strategy involves government intervention to inject funds into the economy, enabling banks to resume financial transactions and support economic recovery, aligning with Keynesian economic theory. The document is available on Desklib, a platform offering a wide range of study resources for students.

The impact of Covid19 on
OakNorth Bank PLC

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Current issues and challenges......................................................................................................3
Proposed solution.........................................................................................................................6
Impact of proposed solution for issues and challenges on stakeholders......................................7
Implementation............................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Covid pandemic and its adverse impact is faced by almost every institution including
banks too. Along with covid and its impacts the financial operations of the banks is being
stopped. They face various challenges in the form of monetary policy, regulations, new entrants
and various other (MARCU, 2021). OakNorth Bank PLC is one of UK banks that provides
business and property loans to small and medium size organizations. It was founded in 2013.
This report will discuss about the challenges faced by OakNorth Bank PLC along with its critical
impact on its concerned stakeholders. Proposed solution along with its implication mode is also
presented in this report.
MAIN BODY
Current issues and challenges
The research will focus on the current issue of the impact of Covid-19 on OakNorth Bank
PLC, followed by the financial impact of monetary action limitations in the global banking
sectors and financial institutions.
The global pandemic has hit all sectors and among them the banking and financial
institutions. Due to lockdown restrictions, the digital finance played a greater role in the financial
markets (Agosto, Arianna, 2020).
SWOT ANALYSIS:
It is one of the important analysis that is concerned with the internal environment and
situation. It will enable the organization to have an analysis of its own capabilities, weakness,
opportunities along with threats. SWOT analysis will assist the company to grab the future
opportunities with the utilization of its strengths and minimize the intensity of threats with the
reduction of threats. This analysis will act as a base that will assist the company to meet the
challenges and changes taking place in the environment. Likewise, it is possible to utilize SWOT
analysis to assess the main challenges of the bank. SWOT analysis focuses on the internal
strengths and weaknesses of an institution, as well as the external opportunities and threats.
SWOT analysis of OakNorth Bank PLC:
Strength:

These are the organization's capabilities that will enable them to grab success (Teoli and
An, 2019). Enabling centralized services in terms of allowing customers to handle multiple bank
account. Also, persistence of full control with respect to customer need and full control also act
as strength of OakNorth Bank PLC. Enabling high level security with respect to protecting
customer confidential information, improvised customer banking experience with the enabling of
internet banking and online transactions are also counted as its major strength with respect to
covid pandemic.
Weakness:
These are the loopholes and drawbacks with regard to organization (Quezada and et.al.,
2019). With an increased digitalization, relation between customer and bank has limited. Lack of
customer credibility with the inculcation of open banking because of the concept of sharing of
ideas also act as major weakness of OakNorth Bank PLC.
Opportunities:
As per covid pandemic and digital transactions offered by OakNorth Bank created and
emerges many opportunities that it can acquire. With the concept of open banking various
services and products are being offered by the bank which itself create many opportunities. As
OakNorth Bank offered personalised banking, discounts with regard to obtaining loans and
various other policies also enable it to grab many more opportunities.
Threats:
These are the major impact which are need to be prevented in order to sustain in
competitive market (Phadermrod, Crowder and Wills, 2019). Fraudulent activities, data
protection issue, data theft, available of more than one option are all counted as major threats that
may impact the OakNorth Bank.
The SWOT analysis reflects that the OakNorth Bank is capable of generating growth in
the long term with the moderate level of challenges in the short to medium term. (OakNorth
Bank, 2020)
‘The crisis caused by COVID-19 is showing its first impacts on the banking sector. Our
analysis assesses the impact on the sector of seven factors and its trends: monetary policy,
digitalization, regulation, economic growth, new entrants, competitive landscape and
government support’ (Ergun, Gouveia, Lles, Herreros, Martinez, Soto, 2020).

The rapid and coordinated response from the monetary authorities was essential to
address the consequences of pandemic crisis (Ergun, Gouveia, Lles, Herreros, Martinez, Soto,
2020).
Figure 1: Covid-19 Public Policies per month (as % of total number of policies for each type)
Source: BBVA Research (Ergun, Gouveia, Lles, Herreros, Martinez, Soto, 2020).
In Figure 1 we can clearly see how the pandemic has affected the way the banking sector
has operated. We see that in the months previous to COVID-19 becoming a major threat, policies
being issued (regardless of type) were incredibly low, barely surpassing 5. However, since the
national lockdowns were placed in effect from march, we find ourselves with an immense spile
in policy creation, displaying just how large of the impact COVID-19 has had upon the banking
sector.
Figure 2: Fiscal and Monetary Policy Measures in Response to the Pandemic

Source: BBVA Research (Ergun, Gouveia, Lles, Herreros, Martinez, Soto, 2020)
The financial impacts of the limitations on monetary action following the outbreak of the
pandemic have been joined by a phenomenal reaction by policy makers. It was possible to
observe uncommon estimates taken both as far as financial and monetary approaches. The
monetary policy has given liquidity uphold just as improved credit offices through loan cost
strategy and new uncommon proportions of quantitative facilitating (Bernanke, 2017). The
phenomenal and composed policy reaction has included financial controllers and managers.
(Elnahass, Trinh, Li, 2021)
The European Commission has additionally done a quick audit of the Capital
Requirements Regulation, foreseeing the utilization of certain components that offered capital
help and encouraging the execution of others after some time (likewise with the presentation of
the new bookkeeping structure, IFRS 9) (Wei and Han, 2021) .
Proposed solution
As an impact of monetary policy the supply of money in the economy is reduced which is
again having a major impact with respect to market liquidity. As during lock down the whole
economy of not only UK but the entire world is being affected. Likewise, along with pandemic,
the banking sector including OakNorth Bank have been affected.

In order to deal with the situation there is only a solution that banks can opt and it
includes offering various policies and offers to its customers so that the liquidity percentage in
the economy may start raising (Husted, Rogers and Sun, 2020). This means with the offering of
loan and advances at subsidized rate and discounted rate, there will be a raise in the existing
liquidity in the market. This will not only raise income of bank but it will also raise flow of
money.
However, at broader and government level the solution would be to make purchase of
shares and bonds by government so that it will raise the flow and supply of money in the market.
It is also to be noted that the proposed solution will lead to resolve the concerned challenges but
at the same time it will also lead to bring adverse impact in terms of raising of too much liquidity
in the market and as a result declining the value of money (Brunner, 2018). Likewise, if the
situation will continue then it will also lead to bring inflation situation.
Impact of proposed solution for issues and challenges on stakeholders
Stakeholders:
These are those personnels that have an interest in an organization, and they may put a
major impact over the organization too (Boaz and et.al., 2018). However, at the same time they
may also get affected with the organization's policies.
Employees, shareholders, customers, financial market, board of directors and government are the
major stakeholders of OakNorth Bank.
The proposed solutions may impact the shareholder on different criteria and context. This
means that with a rise in offering of loans and policies by bank at subsidized rate then it will lead
to have a different impact on various stakeholders. This can be understood as with an issue of
policies and loans the flow of money and liquidity in the market will raise these will lead to have
a positive impact over the financial market. This means that it will lead to bring boom and
financial flexibility within the market. However, it will again puts its impact over the customers
too because it will lead to raise the percentage of liquidity among them which is further followed
by raise in the market liquidity because of raise in cash flows (Gambacorta and Shin, 2018). This
will again help and assist the economy to deal with the situation of covid pandemic along with
supporting and development of the market and the economy. Likewise, employees of the
OakNorth Bank will also get positively impacted with this solution in the form of raising of

working and performance of their jobs which was almost stops and freeze during pandemic
period. Similarly, the concerned shareholders and the board of director also got impacted in the
form of raising of their share and success and growth of financial institution.
However, on a critical note it is also right to said that on the one hand it will lead to have
a positive impact towards the concerned stakeholders but at the same time it will also affect the
stakeholders too. This means that with the adoption of the strategies and practice of raising
liquidity in the market, the stakeholders will be positively benefited but at the same time there
will be negative impact too. This means that with a rise in money supply liquidity in financial
market will raise but it will again impact the market in terms of decreasing the value of money
and along with leading to the situation of inflation. Likewise, concerned employees although
their work will start but at the same time it will lead to create an extra pressure and overburden
of work.
In the same way the government will also be impacted with positive and negative aspects.
This means that with a rise in money supply in economy government will be benefited in the
form of economy's development and growth but at the same time on long run it will impact the
government in terms of facing the situation of inflation which will again impact the economy in
terms of raising the prices of products.
Implementation
In order to implement the proposed solution and the government will play a major role
because the entire process will begin with the government side only. This means that with the
purchase of shares and bonds and other investment government will release funds in economy
which will initiates the banks to perform their functions (Jarociński and Karadi, 2020). Further,
with an offering of discounted rate loan or other policies they will lead to release funds in the
market which will support the entire economy in terms of its operations. Thus, with an enabling
of money customers will perform the transactions and as a result glow of money will begin
which will further regulate the supply and money flow in respect to banks including OakNorth
Bank.
Thus, this whole process will work and implement in a flow and in a specified direction so that
the situation of pandemic will be dealt along with operating the financial transaction of the
banks.

Keynesian theory:
This can also be understood with the help of applicability of Keynesian theory which
shows the relation between total spending in respect to economy and its impact on output,
inflation and employment. As per this theory it is assumed that with a reduction of taxes and
increase in government expenditure, the demand will be pulled and as a result the economy will
move out of the situation of depression (Weintraub, 2018). As during covid pandemic it is seen
that the entire market got affected in the form of the lack of liquidity and along with market the
banking sector including OakNorth Bank also got impacted in terms of affecting towards its
business. But here with the involvement of government which is again one of the major
stakeholder of banking sector will lead to have an enabling of support to economy in terms of
moving out of the situation of depression.
CONCLUSION
From the above report it is concluded that the covid pandemic has arisen various
challenges in respect to banking sector. Among them the impact of monetary policy has majorly
impacted the banking sectors. However, with an adoption of certain strategies in the form of
implementing the government role and banking steps this issues and challenges can be easily
faced off. This report further summarize that how these challenges may put positive as well as
negative impact towards the stakeholders of OakNorth Bank PLC. An implementation plan is
also included under the report that shows that how the proposed plan will be implemented.

REFERENCES
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[Accessed 20 April 2021].
Gottlieb, C., 2020. The EU Commission adopts banking package to facilitate lending in response
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OakNorth Bank, 2020. OakNorth Bank. [Online]
Available at: https://www.oaknorth.co.uk/press-releases/despite-the-ongoing-impact-of-
covid-19-oaknorth-bank-continues-to-see-strong-lending-opportunities-approving-50m-
in-new-loans-since-lockdown-began-and-36m-in-cbils-loans/
[Accessed April 2021].
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