European Commission (EC)

Implications for the Imposition of Capital Controls in Greece

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Introduction

Following the recent event over the weekend (27/28 June 2015), we set out below a short guide on the current status in Greece.

Background

Months of negotiations on a deal to restructure Greece’s debts appear to have failed. Greek Prime Minister Alexis Tsipras has called a referendum for 5 July 2015 on the draft bailout proposals (the “Proposals“) from the EU[1]. Mr Tsipras government will campaign against the Proposals which required a number of measures relating to VAT increases, budgetary restraints, pension reforms and privatisation measures.  On Saturday 27 June 2015 Eurozone finance ministers refused to extend the current EU bailout programme which expires on 30 June 2015. In response on Sunday 28th July 2015 the Greek government announced the imposition of capital controls.

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Reg Cap Analytics: The Nationalisation of SNS – Lessons Learnt

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On February 1, 2013 De Nederlandsche Bank (DNB) nationalised SNS Reaal Group. The Dutch central bank used powers granted to it under the local implementation of the Bank Recovery and Resolution Directive (BRRD), the Special Measures for Financial Corporations Interventions Act.

Shareholders and subordinated creditors were expropriated without compensation as a last resort to prevent systematic contagion throughout the Dutch financial sector. Whilst the intervention act provided an important tool to prevent the collapse of SNS, some crucial aspects of the BRRD were not in place early enough to prevent the deterioration of SNS, most importantly a requirement for financial institutions to plan and prepare for scenarios that could lead to their failure, and early intervention measures allowing regulators to intervene in the management of banks.

In the light of the current regulatory framework, this article considers the background which led to the nationalisation of SNS and discusses whether the planning and preparation requirements and the early intervention measures provided under the BRRD could have resulted in a different outcome for SNS.  Read More.

 

The Legacy of Lehman Series: The EU Bank Recovery and Resolution Directive – Bringing Stability Back to the European Banking Sector

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The collapse of Lehman Brothers was a pivotal moment which had catastrophic effects on the European financial sector which are still reverberating. Inadequacies in banking regulation were highlighted as most jurisdictions had few (if any) specific laws which covered the peculiarities of the banking sector. Documentation and legislation was tested and often found wanting by the courts. The stresses have acted as a catalyst for change in practices, regulation and documentation.

In order to fill the lacuna in statutory tools available to European governments and central banks to deal with failing financial institutions, many European jurisdictions have enacted new legislation. The legislation adopted differs between various jurisdictions within Europe and in some cases the tools at the disposal of the appropriate governing bodies of such jurisdictions are relatively limited.

Six years on after the collapse of Lehman Brothers, the European banking sector is back in the spotlight after a certain amount of turmoil over the first half of 2014. The European banking sector still has its vulnerabilities. The introduction of a comprehensive set of tools which enable relevant authorities to take early and decisive action in relation to failing financial institutions is therefore imperative.

This common framework across the European Union will be provided by the European Bank Recovery and Resolution Directive (“BRRD”) which was adopted by the European Parliament on 15 April 2014. This client alert in the Legacy of Lehman series considers the key terms of the BRRD and the impact it may have in relation to the financial industry.  Read More.

The Legacy of Lehman Series

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Faced with huge losses in the subprime mortgage market, Lehman Brothers Holdings Inc. (the ultimate parent of the Lehman group) filed for Chapter 11 bankruptcy protection on 15 September 2008, a momentous event which shortly preceded the collapse and break-up of that group, including the filing for administration of Lehman Brothers International (Europe), the main operating subsidiary for the UK and Europe.

Looking back from the perspective of the sixth anniversary of the collapse, its consequences still occupy the English courts with numerous decided, settled, on-going and forthcoming cases. This client update is the first in a series describing and analysing the legal legacy of the Lehman collapse by looking at subsequent changes to financial industry regulation in the UK and across Europe to address the shortcomings highlighted by Lehman’s collapse and also considers certain key pieces of Lehman-related litigation in the English courts and the principles which resulted from those cases.  Read More.