Banking

The High Court has held that an exception to the application of the common debtor rule to the doctrine of marshalling exists to enable a creditor to enforce security where that security does not belong to the common debtor, but to a principal for whom the common debtor acts as guarantor.

The Privy Council has held that a material adverse change event of default had been established and that the remedy of appropriation had been validly exercised, but determined that relief from forfeiture was available.

On 4 February 2013, the government published draft legislation proposing changes to the structure of the UK banking system. The Financial Services (Banking Reform) Bill 2012-2013 is designed to implement the key recommendations of the Independent Commission on Banking, including ring-fencing.

The Financial Services Authority has published a policy statement setting out the final amendments to the FSA Handbook to implement the Short Selling Regulation (236/2012/EU).

Ben Kingsley is a partner in Slaughter and May's Financial Regulation Group. On a regular basis, Ben shares his thoughts with PLC Financial Services subscribers on topical developments in the banking and investment services sector. In this first column of the year, Ben comments on: The continuing theme of a cultural reinvention in the banking sector. International proposals for its close but mysterious cousin, the shadow banking sector. The progress of the EU's thinking on the requirement for inside information to be price-affecting. The latest instalment in the SME (small and medium-sized enterprises) swaps litigation.

Ben Kingsley is a partner in Slaughter and May's Financial Regulation Group. On a regular basis, Ben shares his thoughts with PLC Financial Services subscribers on topical developments in the banking and investment services sector. In his November 2012 column, Ben provides an update on the Rubenstein case, comments on the FSA's latest proposals for reforming the client money and assets regime, touches on the Treasury's proposals to modify the threshold conditions for authorisation, and finally includes a brief mention of the Liikanen Report on reforming the structure of the European banking sector.

The High Court has held that an all monies continuing guarantee given when there was an existing specific obligation between the creditor and the underlying obligor would not be discharged by a subsequent variation to the obligation.

HM Revenue & Customs is consulting on the implementation of the Intergovernmental Agreement to Improve Tax Compliance and to Implement FATCA which has been entered into between the UK and US.

The Financial Services and Markets Act 2000 (Short Selling) Regulations 2012 (SI 2012/2554) have been published.

In this article, the Financial Regulation Group at Slaughter and May considers the European Commission's proposals for a eurozone banking union.

The Financial Services Authority has given advance notice of its approach to the UK’s implementation of aspects of the EU Short Selling Regulation (236/2012/EU) and is also consulting on proposed amendments to the FSA Handbook to implement the Regulation.

Jacob Ghanty is a partner and Robin Penfold is an associate in Berwin Leighton Paisner LLP's Financial Services & Markets Group. On a regular basis, Jacob and Robin share their views with PLC Financial Services subscribers on topical payment services and electronic money issues. In their September 2012 column, they consider the forthcoming review of the Payment Services Directive (2007/64/EC) (PSD).

In this article, based on a briefing, the Insurance Group at Slaughter and May consider the implications for the insurance sector of the UK government's June 2012 white paper on banking reform, which set out its proposals for implementing the recommendations of the Independent Commission on Banking (ICB).

The European Banking Authority is consulting on draft regulatory technical standards on capital requirements for central counterparties under the draft regulation on over-the-counter derivative transactions, CCPs and trade repositories.

In this article, extracted from a more detailed briefing on the European Commission's proposals for the proposed Recovery and Resolution Directive (RRD), the Financial Regulation Group at Slaughter and May considers proposals for a bail-in tool as one of the tools available to resolution authorities under the RRD. For details of the ongoing legislative progress of the RRD, see Practice note, Hot topics: EU bank recovery and resolution framework.

The High Court has held that the close-out provisions of the 2002 International Swaps and Derivatives Association Master Agreement are to be construed in a similar way to those under the 1992 ISDA Master Agreement.

This Law Firm Publication by Ali Budiardjo Nugroho Reksodiputro provides a brief summary as to new banking regulations, promulgated on 19 March 2012, which apply to non-banking financial institutions in Indonesia. The regulations, effective as of 8 June 2012, impose an obligation on the institution to create policies for the prevention of money laundering.

Berwin Leighton Paisner LLP's Financial Crime Team is led by partners Daren Allen and Aaron Stephens. The team share their views on topical financial crime issues with PLC Financial Services subscribers every two months. In their financial crime column for June 2012, they consider: The recent landmark decision in Shah v HSBC Private Bank (UK) Ltd [2012] EWHC 1283 (QB) (16 May 2012). Why the Serious Fraud Office (SFO) has carried out no dawn raids since the high-profile arrests of the Tchenguiz brothers in March 2011. The Ministry of Justice's (MoJ) May 2012 consultation on deferred prosecution agreements (DPAs).  

The European Securities and Markets Authority has published its final technical advice on possible delegated acts concerning the regulation on short selling and certain aspects of credit default swaps (236/2012/EU).

The European Commission is consulting on its proposed approach to the regulation of shadow banking entities and activities.

A change of approach to the implementation of the Foreign Account Tax Compliance Act has been announced in a joint statement issued by the governments of the US, France, Germany, Italy, Spain and the UK, which will let foreign financial institutions report to their domestic tax authorities instead of requiring them to contract directly with the US Internal Revenue Service.

The European Securities and Markets Authority has consulted on its technical advice to the European Commission on possible delegated acts regarding the EU regulation on short selling and certain aspects of credit default swaps.

Ben Kingsley is a partner in Slaughter and May's Financial Regulation Group. On a regular basis, Ben shares his thoughts with PLC Financial Services subscribers on topical developments in the banking and investment services sector. In his March 2012 column, Ben comments on wall-crossing in the context of the FSA's February 2012 connected enforcement actions against Greenlight Capital Inc., its owner and president David Einhorn, and three other individuals, together with the FSA's separate March 2012 enforcement action against the London head of credit sales at Credit Suisse. Ben also considers the Supreme Court's February 2012 judgment in the Lehman Brothers client money case.

This Law Firm Publication by Jones Day focuses on a new law, published on 16 January 2012 in Mexico, which permits private persons to jointly participate with both agencies and bodies in public-private association projects. New regulations and guidelines are expected to be issued in the next 12 months, in order to provide more clarity and definitions in relation to the new legislation.

This Law Firm Publication by P+P Pöllath + Partners focuses on the recent adoption of the Act Reforming the Laws on Intermediaries for Financial Investments and on Investment Products (Act) in Germany. In December 2011 the Act introduced further examples of financial instruments encompassed in the German Banking Act, and as of 1 June 2012, interests in close-ended funds will also qualify as financial instruments.

The Treasury and HM Revenue & Customs have published an update on the proposals for the new controlled foreign company regime, including further draft legislation, which is to be introduced in the Finance Bill 2012.

This Law Firm Publication by M & M Bomchil provides a brief update as to the Argentine Central Bank’s recently published regulations, which introduce restrictions applicable to the payment of imports in Argentina.

On 6 December 2011, HM Revenue and Customs and the Treasury published, in draft form, much of the legislation which is to be included in the Finance Bill 2012. The draft legislation was widely anticipated, as it had been promised as part of the government’s new approach to developing, communicating and legislating tax policy.

The European Parliament has passed a legislative resolution adopting, with amendments, the European Commission’s proposal for a regulation on short selling and certain aspects of credit default swaps.

This Law Firm Publication by Andreas Neocleous & Co LLC looks at the amendments to legislation Cyprus have made in relation to the national implementation of Directives 2009/44/EC, 98/26/EC and 2002/47/EC, on settlement finality in payment and securities settlement systems.  

Ben Kingsley is a partner in Slaughter and May's Financial Regulation Group. On a regular basis, Ben shares his thoughts with PLC Financial Services subscribers on topical developments in the banking and investment services sector. In his first column for 2012, Ben considers the Government's response to the final report of the Independent Commission on Banking (ICB) and parliamentary scrutiny of the Financial Services Bill.

Ben Kingsley is a partner in Slaughter and May's Financial Regulation Group. On a regular basis, Ben shares his thoughts with PLC Financial Services subscribers on topical developments in the banking and investment services sector. In this column, Ben considers the European Commission's proposals to revise the Markets in Financial Instruments Directive (2004/39/EC) (MiFID) and the Market Abuse Directive (2003/6/EC) (MAD); recent FSA enforcement action for high street firms' sales failings; the largest FSA fine imposed on an individual for market abuse; and the withdrawal by agreement of Swift Trade Inc.'s judicial review proceedings against the FSA.

The Financial Services Authority has published its final rules for the implementation of the changes to the Capital Requirements Directive (2006/48/EC and 2006/49/EC) made by Directive 2010/76/EU.

This Article considers how proposed rules implementing the Volcker Rule would affect the worldwide operations of foreign banking organizations with a branch or agency in the US.

The European Banking Authority has published guidelines that seek to improve the implementation of internal governance arrangements in credit institutions.

The Financial Services Authority has published finalised guidance on issues relating to remuneration.

The Russian Federation update for September 2011 for the PLC Global Finance multi-jurisdictional monthly e-mail.

This Law Firm Publication by Herbert Smith examines the key aspects of the two newly issued regulations published by Bank Indonesia (BI): BI Regulation No.13/20/PBI/2011 dated 30 September 2011(“PBI13/20”) regarding “Receipt of Foreign Exchange from Export Proceeds and Drawdown of Foreign Exchange from Offshore Loan” and BI Regulation No.13/22/PBI/20011 dated 30 September 2011 (“PBI13/22”) regarding “Obligation to Report the Drawdown of Foreign Exchange from Offshore Loan”. The regulations impose on Indonesian debtors and Indonesian exporters receiving proceeds in a foreign currency, to deposit such proceeds in a bank in Indonesia.

Ben Kingsley is a partner in Slaughter and May's Financial Regulation Group. On a regular basis, Ben shares his thoughts with PLC Financial Services subscribers on topical developments in the banking and investment services sector. In this column, Ben considers a collection of recent developments in the field of investment services, none of which strays far from the familiar themes of the financial crisis and regulatory reform.

In this article, based on a briefing, the Financial Regulation Group at Slaughter and May considers the final report of the Independent Commission on Banking (ICB), published on 12 September 2011, commenting on the practical implications of the ICB's recommendations and suggesting that some of the initial criticisms levelled at the report have been misplaced. An analysis of the practical implications of the ICB's recommendations for the insurance sector can be found in a related Slaughter and May article, see Article, The final report of the Independent Commission on Banking: implications for the insurance sector.

The Russian Federation update for August 2011 for the PLC Global Finance multi-jurisdictional monthly e-mail.

The European Commission has published proposed legislation that is intended to replace the current Capital Requirements Directive (2006/48/EC and 2006/49/EC) and implement the Basel III reforms.

The High Court has held that a fixed charge over future acquired freehold and leasehold properties took effect as a fixed charge and not a floating charge.

The significant cost of applying for a freezing order has, in the past, limited the number of requests from creditors for banks to freeze accounts and to provide information regarding those accounts. Under the proposed European Account Preservation Order (EAPO) regime, that is set to change radically. This article considers the main practical implications of the EAPO regime.

HM Revenue & Customs has published a discussion paper on the tax treatment of regulatory capital instruments that are created to comply with the requirements of Basel III.

The Financial Services Authority has published a paper setting out its initial thinking on the regulatory approach of the new Financial Conduct Authority.

Ian Mason is a partner in the Financial Services Group of Baker & McKenzie LLP and a member of the consultation board of PLC Financial Services. He was previously a Head of Department in the Enforcement and Financial Crime Division of the FSA. Ian shares his views on topical financial services regulatory issues with PLC Financial Services subscribers on a regular basis. In his column for July 2011, Ian considers the document published by the FSA on 27 June 2011, outlining the regulatory approach to be taken by its successor, the Financial Conduct Authority (FCA). (Free access.)

This Law Firm Publication by Freshfields Bruckhaus Deringer discusses the publication of new Law Decree No.70 of 13 May 2011 related  to "first urgent measures on the economy". The decree amends the maximum cap for determining the 'usury rate' and the formula for calculating it.

The Financial Services Authority is consulting on the implementation of changes to the Capital Requirements Directive (2006/48/EC and 2006/49/EC) made by Directive 2010/76/EU.

The Court of Appeal has held that a trustee's right of lien did not have priority over a bank's rights as a secured creditor under the terms of a debenture.

The Independent Commission on Banking is consulting on an interim report on potential reforms to the UK banking sector.

Ian Mason is a partner in the Financial Services Group of Baker & McKenzie LLP and a member of the consultation board of PLC Financial Services. He was previously a Head of Department in the Enforcement and Financial Crime Division of the FSA. Ian shares his views on topical financial services regulatory issues with PLC Financial Services subscribers on a regular basis. In his column for May 2011, Ian considers the joint FSA and Bank of England paper, published in May 2011, on the proposed approach to prudential banking supervision to be taken by the new Prudential Regulation Authority (PRA).

PLC Financial Services asked some of the UK's leading financial services practitioners to comment on the FSA's Business Plan for 2011/12 and Retail Conduct Risk Outlook and Prudential Risk Outlook for 2011. See Article, Maintaining regulatory focus: the FSA's Business Plan for 2011/12 and Risk Outlooks for 2011. This article sets out their comments in full.  

The financial crisis and ensuing losses suffered by counterparties to various structured product transactions has provoked an outbreak of "misselling" cases. A number of cases have been heard by the English courts but proceedings have also been brought in jurisdictions across Europe, including  Germany. In this article, Arun Srivastava and Mathias Wittinghofer, partners at Baker & McKenzie LLP, consider the outcome of cases in Germany and England and the lessons that can be learnt from the differing trends in these jurisdictions.

The Treasury has published a further consultation on reforms to the structure of UK financial services regulation.

The Basel Committee on Banking Supervision has published the text of the main Basel III reforms to the Basel II framework for capital requirements.

The Financial Services Authority has published its policy statement revising the Remuneration Code and its policy statement on remuneration disclosure.

The EU Economic and Financial Affairs and International Trade Sub-Committee of the House of Lords has called for evidence in response to the European Commission’s proposal for a regulation on short selling and certain aspects of credit default swaps.

A consideration of the impact of the EU financial reforms on the OTC derivative and commodities market and a comparison with the US Dodd-Frank Act proposals for reform in this area.

The Court of Appeal has confirmed in Springwell v JPMorgan Chase Bank that commercial parties must look after their own interests rather than expect others to do so. The court also decided that parties are entitled to contract on the basis that no representations have been made even if that is not in fact the case; but, for the agreement to be enforceable, it must be reasonable for the parties to contract in that way.

The Financial Services Authority has published a policy statement on capital planning buffers.

The Council of the European Union has adopted the text of CRD 3, a directive forming part of a sequence of directives amending the Capital Requirements Directive (2006/48/EC and 2006/49/EC).

The Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, has announced the calibration of the minimum capital ratios for banks.

On 29 July 2010, the Financial Services Authority announced a consultation on the extension of its Remuneration Code from 1 January 2011 to cover 2,500 financial services firms, and other proposed changes.

On 26 July 2010, the Treasury published a consultation paper on its proposals for reform of financial regulation in the UK. Although the consultation sets out the government’s proposals in more detail than has been available before, some areas of uncertainty, particularly regarding regulatory crossover, remain.

The Committee of European Securities Regulators is consulting on its technical advice on client categorisation, over-the-counter derivatives, and certain transaction reporting issues in the context of the European Commission’s review of the Markets in Financial Instruments Directive (2004/39/EC).

The Financial Services Authority is consulting on revising the Remuneration Code.

The Treasury is consulting on the design and implementation of the bank levy which was announced in the June 2010 Budget.

The government has announced major changes to the UK’s financial services regulatory structure including the abolition of the Financial Services Authority in its current form.

On 28 May 2010, the Financial Reporting Council published the new UK Corporate Governance Code, concluding an extensive consultation process. Now is a good time for remuneration committees to undertake a review of the remuneration strategies and ensure that they stand up to scrutiny when reporting under the Code.

The Financial Services Authority is consulting on implementing aspects of the Financial Services Act 2010.

The Financial Services Authority has published its Financial Risk Outlook for 2010 and its business plan for 2010/11.

On 10 March 2010, the Financial Services Authority (FSA) published its Financial Risk Outlook for 2010 (2010 FRO). The FSA subsequently published its Business Plan for 2010/11 (2010/11 BP) on 17 March 2010, setting out how it intends to respond to the risks identified in the 2010 FRO.  PLC Financial Services asked leading financial services practitioners to comment on the 2010 FRO and 2010/11 BP - see Article, FSA Business Plan 2010/11: Business as usual?. This article sets out their comments in full. For detailed coverage of the 2010 FRO and 2010/11 BP, see Practice note, FSA priorities and key messages for firms 2010/11: FSA's Financial Risk Outlook 2010 and Business Plan 2010/11.

This Article considers the shortcomings in the prime brokerage model revealed by the collapse of Lehman Brothers, and examines the contractual issues highlighted by the fallout and the subsequent market response.

The Organisation for Economic Cooperation and Development has published a report setting out conclusions and emerging good practices relating to corporate governance and the financial crisis.

Many financing structures used in the last decade have been through previous periods of market disruption and testing, where participants have had to consider in detail their position under the structure. There is no similar precedent for the sukuk market, so sukuk structures are being tested for the first time, sometimes with a worrying difference between legal reality and market perception.

Ian Mason is a Partner and Head of the Financial Services and Regulatory team at Barlow Lyde & Gilbert LLP. He was formerly Head of the Wholesale Group in the FSA's Enforcement Division.  Ian is a member of the PLC Financial Services consultation board. Ian shares his views on topical financial services regulatory issues with PLC Financial Services subscribers on a regular basis. In his column for January 2010, Ian considers: New enforcement cases, including the fine issued by the FSA to Standard Life on 20 January 2010. The FSA's "Dear CEO" letter and report on client money compliance, published on 21 January 2010. Increasing regulation for the mortgage industry, including CP10/2 on mortgage arrears and mortgage advisers. The FSA's consultation (CP10/3) on effective corporate governance.

The Financial Services Authority has published the consultation papers “Strengthening capital standards 3” and “Capital planning buffers”.

The Treasury is consulting on establishing resolution arrangements for investment banks.

Sir David Walker’s final recommendations on corporate governance in the UK banking industry have received a mixed response, but early indications are that the proposals are already beginning to be translated into practice and that they may be of wider applicability than initially thought.

Ian Mason is a Partner and Head of the Financial Services and Regulatory team at Barlow Lyde & Gilbert LLP. He was formerly Head of the Wholesale Group in the FSA's Enforcement Division. Ian is a member of the PLC Financial Services consultation board. Ian shares his views on topical financial services regulatory issues with PLC Financial Services subscribers on a regular basis. In his column for December 2009, Ian makes some predictions for the FSA's work and priorities in 2010.

On 19 November 2009, the Government introduced its Financial Services Bill (Bill) to Parliament.  The Bill includes a number of reforms aimed at strengthening financial regulation and stability, and increasing consumer rights and protections. We asked leading financial services practitioners for their views on the Bill - see Article, The Financial Services Bill: is it fit for purpose?.  This article sets out their comments in full. For further information on the key provisions of the Bill, see Practice note, The Financial Services Act 2010.

The Committee of European Securities Regulators is consulting on proposals for a common definition of European money market funds.

The European Commission has published guidelines on passport notifications under the Payment Services Directive.

The European Commission has published a further draft legislative proposal, which is designed to strengthen financial supervision in Europe.

The European Commission has adopted draft legislative proposals aimed at strengthening the supervision of the EU financial sector.

The Treasury has published guidance on the recognition process for inter-bank payment systems under the Banking Act 2009.

The Takeover Panel Executive has taken steps to allay institutional investors' concerns that collective shareholder action might trigger the Takeover Code's provisions on mandatory offers by publishing a policy statement that provides clarification of this area. However, there are still grey areas that shareholders and their advisers should continue to treat with vigilance.

Ian Mason is a Partner and Head of the Financial Services and Regulatory team at Barlow Lyde & Gilbert LLP. He was formerly Head of the Wholesale Group in the FSA's Enforcement Division. Ian is a member of the PLC Financial Services consultation board. Ian shares his views on topical financial services regulatory issues with PLC Financial Services subscribers on a regular basis.   In his column for September 2009, Ian considers: A speech by Margaret Cole, FSA Director of Enforcement, given on 10 September 2009, in which she signals a change in the FSA's approach to using its criminal powers. The FSA's first criminal prosecution of a mortgage broker for failure to notify the FSA about a change of control of a regulated firm, announced on 10 September 2009. The FSA's enforcement action against a former trading desk manager at a retail stockbroking firm for failing to identify and act on a suspicious client order that allowed the firm to be used to facilitate insider dealing. The European Commission's draft legislative proposals to strengthen the supervision of the European financial sector, adopted on 23 September 2009.

This article considers the potential impact of the UK's proposed banking tax code of conduct, which aims to overhaul banks' relationships with HM Revenue & Customs and reduce opportunities for tax avoidance. It also looks at international developments in the field of anti-avoidance in the US, Germany, the Russian Federation and Australia.

Ian Mason is a Partner and Head of the Financial Services and Regulatory team at Barlow Lyde & Gilbert LLP. He was formerly Head of the Wholesale Group in the FSA's Enforcement Division. Ian is a member of the PLC Financial Services consultation board. Ian shares his views on topical financial services regulatory issues with PLC Financial Services subscribers on a regular basis. In his column for July 2009, Ian considers the following important consultation papers published in June and July 2009:   The FSA's consultation paper on determining the level of financial penalties in enforcement cases (CP09/19), published on 6 July 2009. The Government's White Paper on reforming financial markets, published on 8 July 2009. The FSA's consultation paper on its Retail Distribution Review (RDR) (CP09/18), published on 25 June 2009.

Alarna Carlsson-Sweeny examines how banks are buying back their junior bonds at a discount to increase their core capital bases and shore up the all-important capital ratio.

Fair value accounting is often difficult to apply and poorly understood outside of accounting circles. This article sets out how fair value accounting works under both the US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), and analyses the role of fair value accounting in the current financial crisis.

Ian Mason is a Partner and Head of the Financial Services and Regulatory team at Barlow Lyde & Gilbert LLP. He was formerly Head of the Wholesale Group in the FSA's Enforcement Division. Ian is a member of the PLC Financial Services consultation board. Ian shares his views on topical financial services regulatory issues with PLC Financial Services subscribers on a regular basis. In his column for March 2009, Ian considers the Turner Review and related discussion paper (DP09/2), both published by the FSA on 18 March 2009.

On 9 February 2009, the FSA published its 2009 Financial Risk Outlook (FRO). The FSA subsequently published its 2009/10 Business Plan (Business Plan) on 12 February 2009, setting out how it intends to respond to the risks identified in the FRO. PLC Financial Services asked leading financial services practitioners to comment on the FRO and Business Plan - see Article, FSA Business Plan: bridge over troubled waters?. This article sets out their comments in full. For detailed coverage of the FRO and Business Plan, see Practice note, FSA priorities and key messages for firms for 2009/10.

A consideration of the state aid issues which have arisen out of the recent financial sector rescues and schemes in Europe.