Beyond the Covid-19 Shock: Revisiting Capital Allocation

As the challenge of surviving Covid-19 gives way to the potential for growth, how can CFOs and treasurers make sure they’re ready for any opportunities that lie ahead?

For corporates, the next phase of the Covid-19 challenge is beginning. After a conversation dominated by the tragic human cost of the pandemic and, from a business perspective, liquidity and survival, the focus is shifting to how companies will come out of the crisis.

Will there be a ‘new normal’ with respect to capital structure? And what’s the optimal way to manage both the challenges and opportunities presented by the post-lockdown world? At Standard Chartered, we have developed a framework to help corporates reassess their capital allocation – and we hope it will be useful to all treasurers as they prepare for recovery and beyond.

Focus on the long term

First, we must start with the end in mind. In other words, any new capital allocation structure needs to focus on the longer-term strategic objectives of the business. Yet with uncertainties around the economic recovery, as well as concerns about a second wave of the pandemic, financial agility must remain paramount.

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