Financial Services

Even on crypto assets
our advice is everything but cryptic.
Timo Bernau, lawyer

We are a highly innovative team, which we were able to demonstrate when successfully supporting the first fully blockchain-based securities transaction.

One of the top law firms.
In Germany and Luxembourg.

Two different worlds are colliding in the financial services sector – in one world, we have the ongoing consolidation of fragmented regulation in an already highly regulated market environment, with digital change in the other. The increasing use of new technologies and innovative products and services in the world of business, such as crypto tokens, biometric mobile payments and robo-advisers, has led to an increase in technology-related risks and significantly raised the risk of cybercrime, a growing threat to financial institutions. In turn, this means that further regulation is needed.

At GSK Stockmann, we have extensive practical experience in the field of financial services. We also have close connections with a wide range of regulators and banking associations. As experts in areas such as legislation, we can regularly voice the concerns of those operating in the financial services markets.

All this means that we are particularly well-placed to help you navigate through the regulatory ‘tsunami’. Our team is well known for its highly innovative work, as successfully demonstrated by our role in the first blockchain-based securities transaction in Germany and in the design of various innovative payment products and processes.

With our financial services team, we are among the top law firms in Germany and Luxembourg and have already been nominated “JUVE Law Firm of the Year for Banking and Financial Law” several times. Knowing the challenges of the market, our mission is to develop sophisticated solutions for you, so that you can realise the full potential of your ideas – from your perspective.

Financial service providers
are great with numbers.
They especially count on a top law firm.

Markets in focus

If you want to make the most of every opportunity for growth across the board, top-notch support is a crucial ingredient. Our bundled expertise in all sectors and markets is the answer.

In the aftermath of the financial crisis, the banking and financial services business has been exposed to a massive wave of regulation and continuing cost pressures. Since then, business models for banks and financial service providers have been adapted to ensure regulatory compliance with the new requirements, such as MiFIR/MiFID II, PSD II, EMiR and CRR (2)/CRD (V), and have also been subject to heavy regulatory scrutiny.

New players such as robo-advisors, lending platforms and so-called FinTech banks, are attracting attention with their innovative products and are increasing competition in financial markets. Banks and financial service providers need to adapt to meet these challenges. Partnering with FinTechs, for example, and introducing tougher IT requirements in the area of financial regulation also offer opportunities to banks for keeping pace with the currently evolving digital environment.

Our experienced financial services team advises national and international banks and financial service providers, as well as other industry-related, non-regulated service providers. We have a sound understanding of the industry, the regulatory requirements and the economy, and regularly liaise and interact with regulators, legislators and industry bodies.

There is no doubt that the payment sector is currently the most dynamic and innovative segment in the financial world, while at the same time presenting major challenges to traditional business models. Traditional payment methods are under attack from mobile payment concepts and new payment methods and means (biggest buzzwords right now are biometrics, Consumer Device Cardholder Verification (CDCVM) and Bitcoin payments). Non-industry players are putting the established players under increasing pressure. Digital ledger technologies such as blockchain are promoting the emergence of new, decentralised structures. In addition, a number of the standard setters are intervening massively in existing business models. The significant capping of the revenues of card-issuing institutions by the interchange fee regulation, the obligation to open up the technical customer-bank interface for so-called third-party payment service providers, and, most importantly, the requirements for strong customer authentication under the second Payment Services Directive are just three such examples. All this makes payment transactions and e-money products one of the most exciting and innovative fields in the financial sector today.

Unlike any other law firm, GSK Stockmann advises every company active in payment transactions (from banks, payment institutions and e-money institutions to FinTechs, associations and payment factories, etc.) in German and European payment transaction law (including EU regulations, civil law, payment transaction agreements, electronic payment transactions, and cryptocurrencies, etc.).

Young companies with innovative, technology-based business models – FinTechs or InsurTechs for short – are now firmly established in the financial market and insurance sector. Their business model is particularly characterised by an ability to provide specialised financial services tailored to specific customer groups or niches through innovative, technology-driven processes. The focus is currently on products that are as customer-friendly, efficient and convenient as possible.

We see it as our task to bring this goal in line with the high regulatory standards that regularly apply here. The special features of the various business models, which need to be taken into account when drafting contracts, play just as central a role as coping with the complexity that arises, on the one hand, from the interaction of the various legal areas affected and the intensity of regulation in this area, and from the interdisciplinary cooperation between IT developers, finance experts, and ourselves as legal advisers on the other. Thanks to our extensive experience, we can handle these complex scenarios in a secure and cost-effective manner for our clients. We thrive on the exciting challenges that the very dynamic development of this market segment brings with it.

Transparency, sustainability and digitisation characterise the securities business and the current sales activities of those operating in the financial markets.

The financial markets directive, MiFID II, and the new requirements for sustainable finance are setting new standards. The requirements for so-called product governance, transparency with regard to compliance with environmental, social and governance (ESG) criteria, prohibition of commissions and increased requirements for cost transparency will severely impinge on the way existing sales are structured in the future. At the same time, digital distribution channels for the various types of securities transactions are gaining ground. Simultaneously, the creation of a common capital market union is opening up new investment opportunities for the real economy. New requirements for prospectuses, venture capital funds and securitisations will consciously promote equity investments through the EU-wide integration of capital markets and create new sources of finance, in particular for small and medium-sized enterprises.

In this rapidly changing regulatory environment, we provide our clients with comprehensive advice, not only on setting up new sales and processing structures (the buzzword here is platform solutions), but also on the implementation of structured product and financing solutions, for example on the issue of securities and their distribution via alternative issuing vehicles in Germany and Luxembourg.

We provide comprehensive legal advice on all financing issues, complemented by our expertise in supervisory law. Our activities focus in particular on:

Drafting and negotiating credit agreements, collateral and other finance agreements
Real estate financing
Acquisition financing
Project finance
Issuance of promissory note loans
Subordinated loans
Structured finance and securitisation
Leasing, factoring
Acquisition of loans
Derivatives
Restructuring
Ongoing advice on credit relationships
Advisory services in the event of default, syndication, debt restructuring or contract transfer

In the current low-interest environment, insurance companies are faced with the dual challenge of seeking out suitable, transparent capital investments for the investment of insurance assets and being able to provide attractive insurance products for their customers. As regulated market participants, they are also subject to increasingly stringent requirements. In the case of investments, this involves conforming to the provisions of Solvency II and, in instances where they offer their own products, complying with the increasing transparency and governance requirements of the Insurance Distribution Directive similar to MiFID II, and thus on the requirements of securities distribution.

Together with our wide-ranging expertise in investment law we provide insurance companies and insurance sales companies with comprehensive advice on all investment and sales issues as well as regulatory governance.

Your contacts.

Understanding your perspective. And finding the best solution.
That is our mission (from left to right):

Dr. Timo Bernau

Partner*

+49 89 288174-54

timo.bernau@gsk.de

Go to profile

Andreas Heinzmann, LL.M. eur.

Partner*

+352 271802-30

andreas.heinzmann@gsk-lux.com

Go to profile

Key areas of advice

The right experts for every challenge, the perfect team for every client: we focus on the elements that drive your success.

An essential focus of our advice on financial regulation is the support and management of licensing procedures for the establishment of banks, insurance companies and financial service providers, as well as payment institutions and electronic money institutions. We also advise regulated companies on their day-to-day business operations and on product design in connection with the compliance and adherence to the regulatory requirements relevant to them. We also advise clients on all aspects of restructuring and reorganisation, as well as liquidation and insolvency. Our expertise extends to:

Licensing procedures and licence extensions
Outsourcing and cooperation agreements
Qualification of managers/supervisory boards
Remuneration systems (Remuneration Ordinance for Institutions)
Capital requirements (Basel III/IV, CRR (2)/CRD IV/V; IFD/IFR)
Group structures and consolidation rules
Regulatory organisational requirements (MaRisk, BAIT, KaMaRisk, PSD II EBA Guidelines, etc.)
Regulatory conduct of business regulations (MiFID II, MaComp)
Reorganisation and restructuring

Our specialist expertise includes the contractual implementation of your banking products and services in a highly regulated environment that is also subject to a high degree of consumer protection regulations.

Together with our financial services team, we are perfectly equipped to advise you on all questions around banking contract law, in particular in the preparation of:

All customer documentation in the area of banking and financial services as well as payment transactions, including general terms and conditions,
Consumer credit and corporate credit agreements as well as leasing and factoring agreements,
Any securities documentation, in particular securities prospectuses and base prospectuses,
Non-standard investment contracts in the field of investment products,
Smart contracts and tokens,
Contractual applications in compliance with pre-contractual information requirements, distance selling regulations and rights of withdrawal,
Investor documentation and information required by supervisory law (advisory protocol, suitability test, etc.),
The KYC process (AML identification),
Cooperation agreements/outsourcing contracts (insourcing/outsourcing) and
Data protection information and processing directories

Our advisory services in payment transactions include in particular the following projects and topics:

Support with licensing procedures as a payment institution or e-money institution
Support in product design, preparation of customer terms and conditions and cooperation agreements
Advice in connection with regulatory standards compliance, in particular PSD (II), including issues relating to strong customer authentication, EMD, MIF, SEPA as well as regulations of card organisations and payment systems
Platform-based payment solutions
Card or instrument-based payment systems, in particular credit card business (issuing and acquiring)
Mobile payments, in particular digitalised card payments in mobile banking with biometric user authentication (CDCVM)
E-money products
Loyalty schemes and loyalty cards
Corporate Payments, Payment Factories and Group Inhouse-Banks
Tax structuring and optimisation (in particular VAT)

One of our main specialities is providing advice on the digitisation of banking, financial and insurance services. Our lawyers have many years’ experience and expert knowledge in the legal aspects of tax structuring (particularly VAT) and the development of various FinTech models and have carried out pioneering work in many areas.

We provide our clients with comprehensive advice, focusing on the development of their digital business models and products, as well as on the drafting of corresponding contracts with cooperation partners. Of course, we also assist you with the necessary licensing procedures with the relevant supervisory authorities. Our FinTech team has a breadth of expertise across the following:

Algorithm trading, signalling and automated order execution
Alternative payment methods
Automated investment consulting (robo-advisors)
Automated financial portfolio management
Banking-as-a-service (BaaS) or white label banking
Crowd bonds
Digital financing platforms (crowdfunding, crowdinvesting, crowdlending)
Digitisation of securitisation transactions
Initial coin offerings and smart contracts
InsurTech
Credit factories
Crypto and distributed ledger technology applications and products
Artificial intelligence and big data
RegTech and compliance applications
Mutual cooperation between banks and FinTechs (outsourcing/insourcing)

We advise companies regulated under financial supervision law (in particular those subject to BaFin supervision) and/or under anti-money laundering law (in particular banks, financial services institutions and investment management companies) regarding the precautions they must take in order to meet the regulatory requirements incumbent upon them (regulatory compliance). We provide tailor-made project-related or case-specific advisory services as well as ongoing legal advice to clients. In addition, we assume compliance functions for our clients (e.g., compliance officer, anti-money laundering officer, central investigation office, contact point for whistleblowers) by means of outsourcing. Our expertise in the area of regulatory compliance includes:

Designing, operating and improving risk-based compliance management systems (CMS) for regulatory compliance, including the prevention of money laundering and terrorist financing having regard to the client’s specific business model,
Reviewing business partners (KYC checks) including monitoring sanctions lists
Legal support in supervisory measures (e.g. special audits)
Carrying out internal investigations, including crisis management and representation in legal follow-up proceedings (if necessary)

Banking and financial disputes are often not only complex in terms of substance. In procedural law, there are a number of special strategies that must also be observed, such as those necessary for safeguarding reputation and avoiding unfavourable precedents. We have a thorough understanding of banking and financial litigation and have extensive experience in the drafting and application of all known dispute resolution mechanisms, including the structuring of collective actions (including investor test cases and test actions for declaratory judgement), as well as alternative dispute resolution mechanisms and arbitration proceedings. We advise on disputes in the following areas, where we regularly represent banks, financial service providers, leading companies and institutional investors:

Prospectus liability and liabilities of investment advisers/broker-dealers
Adviser liability
Capital market disputes (including omitted insider information)
Payment transactions (including misuse of payment methods)
Credit law and collateral security law (e.g., enforcement of claims arising from loans, mortgages and sureties)
Representation in compliance violations
Treaties between federal states and investment protection
Unfair competition and liability risks arising from business general terms and conditions
Legal matters at the interface of corporate law and M&A transactions (including resolution appeal, arbitration proceedings, M&A adviser liability, auditor liability, and management liability

As a team, we work alongside our M&A specialists to provide combined expertise on national and cross-border mergers, acquisitions and participations with the aim of safely circumventing regulatory pitfalls, while also making use of any room for manoeuvre. With our extensive experience and established network of contacts with German and European supervisory authorities, we assist clients seamlessly and efficiently, even in complex owner control proceedings. Our expertise in banking M&A includes:

Purchase and sale of regulated banks, financial or payment service providers and insurance companies, including advice on tax-efficient structures as well as both pre-acquisition and post-acquisition measures
Comprehensive financial, legal and tax due diligence in relation to regulated entities
Acquisition or reduction of a significant holding in a regulated undertaking
Owner control procedures
Separation and sale or takeover of subdivisions or portfolios of a regulated institution
Winding-up and liquidation as well as restructuring of regulated institutions or groups of institutions

We advise clients on securities business and distribution with a particular focus on the following:

Asset management, portfolio management, investment advice and brokerage
Customer information, in particular according to WpHG [Securities Trading Act], PRIIPS-VO, KAGB [German Capital Investment Code], VermAnlG [Investment Act]
Compliance with organisational requirements for securities service providers, such as cost transparency, reimbursements, taping and compliance
Portfolio management and service agreements
Access to tied brokers
Sales of alternative investments, in particular productive investments
Advising family offices in the regulated and non-regulated securities business
Securitisations
Structured financing
High yield bonds
Hybrid financial instruments
Listings
Corporate bonds

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