Financial Regulation

Recognising risks,
seizing opportunities.

There is hardly any other industry currently facing such major regulatory challenges as the financial sector. The set of standards consisting of EU directives, directly applicable EU regulations, delegated acts, guidelines, national standards and European and national supervisory practices and their interaction is more than complex. At the same time, compliance breaches are increasingly severely sanctioned. The legal protection of so-called ‘whistleblowers’ will make the detection of violations more likely in the future.

Traditional business models are being heavily impacted not only by customer behaviour changes supported by technological advances, particularly that of the younger generation – also known as ‘digital natives’ – but also by huge regulatory intervention. The commission bans under MiFID II and the significant capping on the revenues of card-issuing institutions are just two examples.

More than ever before, the banking industry requires new thinking and the development of innovative solutions.

The special situation in which the finance industry now finds itself is also placing special demands on its legal advisers. The GSK Stockmann team revels in the challenges of this rapidly changing regulatory landscape. Well-coordinated and highly specialised, our team pursues an interdisciplinary, networked and highly innovative approach in developing resilient structures.

Financial Regulation

In the field of financial regulation, the GSK Stockmann team of highly specialised and experienced lawyers advises on a wide range of financial regulatory issues. 

In addition to special legal procedures, such as those under the German Capital Investment Code (Kapitalanlagegesetzbuch, KAGB) and the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz, ZAG), we have also been assisting clients for over twenty years with the various licensing and licence extension procedures under the German Banking Act (Kreditwesengesetz, KWG) and with their market entry as credit or financial services institutions. This has often resulted in long-standing business relationships in which we have helped our clients with every type of regulatory question imaginable.

The entire spectrum of financial services regulated by the German Banking Act, particularly the securities business and distribution, is an integral part of our daily work. We can advise you on all matters concerning the regulatory requirements for your business model, licensing and the regulatory focus of your business organisation. We also ensure the correct operational structure and its documentation to comply with the relevant MiFID II requirements.     

We advise you as a team with our M&A and tax experts on national and cross-border mergers, acquisitions and participations with the aim of safely avoiding regulatory ‘pitfalls’ and making use of room for manoeuvre, for example in the regulatory design of your business model. Our extensive experience and established contacts with national and European supervisory authorities ensure that complex ownership control proceedings can be handled efficiently.

Our digitisation experts develop – often as the first in the market – innovative designs for novel financial products and have been advising for years on various partnerships between non-regulated FinTechs and regulated financial institutions. For example, GSK Stockmann advised on the first securities issue in Germany originally carried out as a blockchain transaction, in which the money side was also settled directly on the blockchain for the first time.

Our comprehensive expertise and in-depth knowledge of the market and the various payment transaction systems – which our lawyers have been able to demonstrate not least by advising on various legislative procedures – equip us to help clients develop complex and innovative payment systems and e-money products as well as advising on questions relating to the design and operation of payment systems and their regulations. We offer you our specialist experience in the preparation of licence applications for ZAG-regulated payment and e-money institution as well as in advising on innovative payment products – also in partnership models – with our specialised expertise in payment services regulation according to PSD2 and RTS for strong customer authentication and secure communication).

The CRD V and the CRR II are likely to be among the most important regulatory projects for banks in the EU in the coming years. The package includes, in particular, amendments to capital requirements, large exposure requirements, requirements for institutional and financial holding groups, including changes in consolidation requirements, remuneration as well as some easements for small institutions.

For CRR investment firms (and those financial services institutions to which CRR requirements apply under banking law in Germany), the review brings a number of significant innovations with regard to the capital requirements under CRR and IFD/IFR applicable to these firms and institutions. Our lawyers answer all your questions in this complex field. As a sparring partner, we work alongside you advising on specific questions, as well as on in-depth analyses of the complex way in which institutions and groups are affected. We can also help you in the comprehensive drafting of a detailed implementation plan.

The regulatory environment poses particular challenges to institutional and financial holding groups, particularly in the light of the new provisions of CRD V and CRR II. These challenges include changes to consolidation requirements (including wider perimeters for prudential consolidation under certain conditions), statutory licensing requirements for financial holding companies and the requirement for large non-EU banks to establish an EU intermediate holding company. We advise institutional and financial holding groups not only on the implementation of the new requirements, but also with the restructuring and integration of new group companies.

Our employment law experts focus on supervisory law and translate the regulatory requirements for remuneration in banks, financial service providers and investment management companies into practical solutions. Against this background, we advise credit and financial services institutions on all issues arising in connection with the Remuneration Ordinance for Institutions. We do not look at your supervisory remuneration policy in isolation, but also with regard to the particularities of employment law. This enables us to offer you tailored solutions, no matter how complex the problem. Our advisory services focus on the development and implementation of remuneration systems, advising group companies on the group-wide applicability of remuneration regulations and representing them vis-à-vis the BaFin within the scope of coordinating the relevant guidelines.

For example, the legislator requires investment management companies to put in place suitable and transparent remuneration systems with, in some cases, strict requirements for variable remuneration components. This remuneration system must be submitted as part of the licensing procedure. We have broad experience in advising investment management companies on the relevant remuneration regulatory issues.

Our regulatory compliance experts are on hand to assist you with their cross-sectional expertise and experience in the implementation of the financial regulatory requirements for the organisation relevant to the regulated activities, including any business processes impacted by such regulations. In addition to providing advisory support, we also assume compliance functions through outsourcing if required (e.g. compliance officer, money laundering reporting officer and contact point for whistleblowers). In the event of a crisis, we conduct internal investigations and guide you through any follow-up measures.

Disputes in the field of financial regulation are often complex for multiple reasons. In court, various special strategies need to be taken into consideration in order to protect a client’s reputation, for example, or avoid an adverse legal precedent. We advise and support our clients in public court cases, arbitration proceedings and out-of-court settlements. In all disputes, we help you develop tailored solutions in connection with the regulatory requirements which apply to the investment industry.

Banking and finance disputes are often complex for multiple reasons. From the point of procedural law, special strategies must be followed to protect, for example, a client’s reputation and to avoid unfavourable precedents. We advise our clients in proceedings before state courts, in arbitration proceedings and in out-of-court settlements. In all disputes, we work with you to develop tailored solutions that satisfy the financial supervisory and regulatory requirements of the financial sector.

In this context, the following areas of activity also form part of our field of business:

  • Communicating and negotiating with supervisory authorities and organisations such as BaFin, the German Central Bank, the European banking supervisory authorities, deposit guarantee schemes and compensation schemes, data protection authorities, chambers of industry and commerce, tax authorities, and social security authorities, etc.
  • Structuring of contractual relationships with service providers in line with supervisory law (outsourcing)
  • Providing legal advice for outsourcing projects
  • MaRisk, MaComp or BAIT implementation, including preparing organisation manuals
  • Supporting compliance and money laundering prevention organisation
  • Providing advice on annual financial statements and Securities Trading Act (WpHG) audits
  • Providing advice on regulatory equity capital
  • Ownership control procedures
  • Bank restructurings
  • Laws governing German savings banks and cooperatives
  • Mortgage bond law
  • Currency legislation and central bank law

“They have profound knowledge and research the area well, so that they are absolutely sure on legal issues. Moreover they have a good commercial understanding and experience in the market.”

(Client)

“Everyone is technically highly skilled, brings to light pragmatic solutions and responds very quickly and reliably.”

(Client)

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