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Banking Regulation 2019 Banking Regulation 2019 Contributing Editors: Peter Hsu & Rashid Bahar GLOBAL LEGAL INSIGHTS - BANKING REGULATION 2019, SIXTH EDITION Contributing Editors Peter Ch. Hsu & Rashid Bahar, Bär & Karrer Ltd. Production Sub Editor Andrew Schofield Senior Editors Caroline Collingwood Rachel Williams General Consulting Editor Alan Falach Publisher Rory Smith We are extremely grateful for all contributions to this edition. Special thanks are reserved for Peter Hsu & Rashid Bahar for all of their assistance. Published by Global Legal Group Ltd. 59 Tanner Street, London SE1 3PL, United Kingdom Tel: +44 207 367 0720 / URL: www.glgroup.co.uk Copyright © 2019 Global Legal Group Ltd. All rights reserved No photocopying ISBN 978-1-912509-63-8 ISSN 2051-9621 This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations. The information contained herein is accurate as of the date of publication. Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY March 2019 CONTENTS Preface Peter Ch. Hsu & Rashid Bahar, Bär & Karrer Ltd. General chapter Redefining banking in the post-crisis world Daniel Tunkel, Memery Crystal LLP 1 Country chapters Andorra Miguel Cases & Marc Ambrós, Cases & Lacambra 9 Angola Hugo Moredo Santos & Filipa Fonseca Santos, Vieira de Almeida 26 Austria Peter Knobl, Cerha Hempel Spiegelfeld Hlawati 35 Brazil Bruno Balduccini & Ana Lidia Frehse, Pinheiro Neto Advogados 50 Canada Pat Forgione, Darcy Ammerman & Alex Ricchetti, McMillan LLP 61 China Dongyue Chen, Zhong Lun Law Firm 74 Czech Republic Libor Němec & Jarmila Tornová, Glatzova & Co., s.r.o. 83 Germany Jens H. Kunz & Klaudyna Lichnowska, Noerr LLP 99 Hong Kong Ben Hammond & Colin Hung, Ashurst Hong Kong 112 India Shabnum Kajiji & Nihas Basheer, Wadia Ghandy & Co. 126 Indonesia Luky I. Walalangi, Miriam Andreta & Hans Adiputra Kurniawan, Walalangi & Partners (in association with Nishimura & Asahi) 136 Italy Marco Penna, Giovanna Tassitano & Gabriele Conni, Legance – Avvocati Associati 148 Korea Thomas Pinansky, Joo Hyoung Jang & Hyuk Jun Jung, Barun Law LLC 157 Liechtenstein Daniel Damjanovic & Sonja Schwaighofer, Marxer & Partner, attorneys-at-law 168 Luxembourg Denis Van den Bulke & Nicolas Madelin, VANDENBULKE 179 Mozambique Nuno Castelão, Guilherme Daniel & Gonçalo Barros Cardoso, Vieira de Almeida 190 Netherlands Bart Bierman & Eleonore Sijmons, Finnius 199 Nigeria Dr. Jennifer Douglas-Abubakar & Ikiemoye Ozoeze, Miyetti Law 210 Portugal Benedita Aires, Maria Carrilho & David Nogueira Palma, Vieira de Almeida 222 Russia Alexander Linnikov, Sergei Sadovoy & Leonid Karpov, Linnikov & Partners 234 Singapore Ting Chi Yen & Poon Chow Yue, Oon & Bazul LLP 247 South Africa Angela Itzikowitz & Ina Meiring, ENSafrica 259 Spain Fernando Mínguez Hernández, Íñigo de Luisa Maíz & Rafael Mínguez Prieto, Cuatrecasas 269 Switzerland Peter Ch. Hsu & Rashid Bahar, Bär & Karrer Ltd. 288 Timor-Leste Nuno Castelão, João Cortez Vaz & Rita Castelo Ferreira, Vieira de Almeida 305 Uganda Kefa Kuteesa Nsubuga & Richard Caesar Obonyo, KSMO Advocates 317 United Kingdom Simon Lovegrove & Alan Bainbridge, Norton Rose Fulbright LLP 326 USA Reena Agrawal Sahni & Timothy J. Byrne, Shearman & Sterling LLP 343 PREFACE anking has a global reach. It is also a heavily regulated industry. Simply staying abreast of the ongoing developments is a challenge, Beven for the most dedicated specialist. For example, it is difficult to anticipate whether or to what extent Fintech will disrupt the industry. However, it requires a thorough analysis from a legal and regulatory perspective in the individual case, and has triggered initiatives for regulatory change in numerous jurisdictions. This is where this book comes in. It provides general counsels, regulators and lawyers with a comprehensive insight into banking regulation in 28 jurisdictions around the world. The chapters have been written by leading practitioners in each jurisdiction, who provide their analysis and views on the current state of regulation and ongoing developments. To facilitate comparisons, the structure of each chapter is the same: It starts by introducing the reader to the architecture of banking regulation in each jurisdiction, covering both the rules that are applicable to banks and the regulators in charge of supervising and enforcing them, followed by an overview of new trends and legal developments in the area of banking. The authors further describe the key requirements for governance of the board of directors and senior executive management, as well as the internal control environment of the entire financial institution. The chapters then extend to presenting regulatory capital requirements, analysing the role of national and international standards in defining these requirements, as well as the impact of international initiatives to improve capital and liquidity requirements in the jurisdictions that are surveyed. Finally, the rules protecting clients are reviewed, covering not only rules that apply to the conduct of banks when dealing with clients, but also rules on cross-border services and anti-money laundering initiatives. Overall, our hope is that this book will prove a stimulating and insightful read, which will prepare banks and their advisers not only to overcome but to master the challenges they and their clients are facing at a global level. Peter Ch. Hsu & Rashid Bahar Bär & Karrer Ltd. Redefining banking in the post-crisis world Daniel Tunkel Memery Crystal LLP This is a book about banking regulation. It divides into a series of chapters, arranged alphabetically by jurisdiction. The contributors are acknowledged legal experts in their fields, working as partners or associates with leading national and international firms. This book is now into its sixth edition, and the publishers felt that it therefore merited an introductory chapter, something not featured previously – not merely a preface or foreword, however, but something more substantial. But this chapter cannot be an overview or summary of the rest of this book. The chapters that follow can and will speak for themselves. I would like to offer something a little different – something that may help to place the rapidly changing world of banking and bank regulation into a broader context. The shifting relationship between banking regulation and regulation of other financial services The relationship of banking to other facets of the financial services sector in recent generations has been close at times, yet strangely non-correlated in terms of regulation. Banking is older, by far, than activities such as stock-broking or insurance. There is evidence of both lending and deposit-taking activity from the ancient world, well predating the concept of money, in fact. The arrival in more recent centuries of securities markets, companies that issue their own shares, collective asset and fund management, and the entire concept of insurance, has stimulated the bankers into becoming involved in these newer market features, as facets of their own core business of lending and taking deposits. Over time, it has led to a complex relationship between these various activities and their principal actors. Needless to say, modern technology, and the far greater interconnectedness of international markets, have greatly complicated the process of practical regulation. In the last 33 years, we have moved through various regulatory iterations in the UK: • Formal securities regulation was imposed in the UK under the Financial Services Act 1986. Various organs sprang up to regulate shares, debt, funds, derivatives and insurance, all at that stage operating alongside a semi-statutory framework for the regulation of banks, still controlled by the Bank of England.1 All of these components were designed to regulate themselves. • Various factors2 led by 1997–8 to a desire for formal statutory regulation, and a single regulator to oversee everything. With the coming into force on 1 December 2001 of GLI – Banking Regulation 2019, Sixth Edition 1 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Memery Crystal LLP Banking in the post-crisis world the Financial Services and Markets Act 2000, this regulator was the Financial Services Authority. The FSA even absorbed the function of regulating banks for the first time.3 • The 2007–9 Financial Crisis demonstrated flaws in the FSA regime. Thus, from 2013, the UK system officially reverted to one of two regulators. Responsibility for the prudential regulation of banks was retransferred to a facet of the Bank of England, constituted as the Prudential Regulation Authority. A pared-back version of the FSA, now called the Financial Conduct Authority, was left to look after everything else.4 • Even this has not settled matters, as from the coming into force of the Financial Services (Banking Reform) Act 2013, a third regulator was added to the mix – the Payment Systems Regulator – with a range of powers to compel financial institutions to do various things to ensure that payment systems operate in a fair and competitive fashion. The PSR has been fully operational since April
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