Banking and Regulatory

ECB, new technologies and Brexit set trends

In recent months, regulatory work for banks has separated into three strands: classic regulation, new issues related to the rise of IT-related services in banking and – since June – the future role of the financial centers in London and Frankfurt following Great Britain's upcoming exit from the European Union. The prospect of Brexit meant the regulatory lawyers were in for an inadvertent boom, with the legal scenarios still remaining anyone's guess. As the second strongest European financial center behind London, however, Frankfurt could really profit.

The city has already become more important through the European Central Bank's new role as regulator for the 120 significant banks in the eurozone – even if the stress tests conducted by the European Banking Authority (EBA) still take place in London (for the time being). Most observers, however, are not convinced this will remain the case.

Fintech yields new competitors in the banking sector

On a broader front, regulatory specialists are coming to grips with fintech. These new business ideas are giving rise to competition for classic bank work and with this come challenges from those who would poach the traditional institutes. Players from all sides are confronted with new legal terrain, e.g. payment services law. Such diverse issues demand diverse expertise from the advising lawyers and close consultation with national and European overseers.

Despite top instructions, growth stutters

In spite of the plethora of current issues, many established practices have been pitched to their limits. Almost unanimously, firms bemoan the lack of new talent, but the real bottleneck is at the top end of the career ladder: for years, the circle of leading lawyers has remained practically unchanged. New partner appointments in the top practices are rare. In recent years this has led to an exodus of experienced lawyers from highly respected regulatory teams toward in-house positions or to smaller rivals offering little to no regulatory expertise.

Even in 2016, lawyers from Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters jumped ship to financial houses. Banks are increasingly handling regulatory matters in-house, having boosted their capacities, while the major accounting firms are called on more frequently for financial issues.

Price pressure spreads to regulatory work

For the legal scene this means that, even in regulatory work, the pressure on prices is rising. Those practices within reach of the top of the market are upping their game in complex projects, esp. M&A transactions, major court cases and internal investigations. With precisely this combination, one firm has staked its claim in the market – a firm that, just a short while ago, nobody would have taken seriously: Gleiss Lutz. Practices that are on the ascent include Simmons & Simmons, which took on a counsel from Clifford Chance, as well as Ashurst and Dentons, which both bolstered their regulatory practices with experienced specialists from Allen & Overy.

 


 

This subchapter covers those firms which provide regulatory advice to banks as well as advice on financial products or transactions in the financial sector. Opening new branches, equity guidelines, solvency issues, disclosure obligations as well as authorization proceedings and their retraction are all dealt with in this chapter. As regulation becomes stricter as a result of the financial crisis, contacts to national and European institutions also play a significant role, so that many banking practices work closely together with the administrative fields. Moreover, this chapter also refers to special litigation practices at several firms in so far as they have developed sector expertise regarding financial institutions. There are therefore overlaps with practice areas including ?state aid law, ?restructuring and insolvency and ?dispute resolution.