Trends & Challenges
- Due to increased regulatory focus over the last decade on improving financial resilience in the banking sector, as well as the recent government Covid-19 support programmes, the sector as a whole has suffered less stress than many other industries. New and challenger banks have been under the greatest pressure within the sector, often due to sub-scale operations, financing issues or the impact from a reliance on specialist lending. In some cases this has translated into pressures on regulatory capital minimums and liquidity requirements.
- A recent area of focus for regulators has been on solvent wind down plans (“SWDP”) as an evolution of resolution planning, bringing a more practical perspective designed as an alternative to an insolvent exit. This is to ensure that the failure of a recovery plan for a distressed bank does not result in resolution or insolvency, but rather results in a controlled wind down in which all depositors are paid out in full. Historically, SWDP’s have not been at the top of the board agenda and have been seen as a theoretical compliance exercise, however, they are increasingly coming under regulatory scrutiny to ensure they are both appropriately costed and practically implementable. This is particularly relevant for new banks, with their pillar 2b regulatory capital being set in line with their SWDP.
- Looking forward, banks are considering how regulatory requirements will continue to evolve, particularly post-Brexit and as a result of the industry-wide digital transformation required to meet the changing demands of retail consumers. Furthermore, in a low interest rate environment, increasing scale and a stable funding base is also likely to be at the top of the agenda leading to potential M&A opportunities in the mid-tier.
Solvent Wind Down
- We led the wind down and solvent liquidation when Standard Chartered decided to exit from its Swiss private banking business. This involved analysing the client and asset base to identify optimal wind down approaches (a combination of transfer to other booking centres, portfolio sale, transfer to the Court and account closure).
- Introduced potential buyers for portfolio sale. Led the regulator engagement plan and activities. Developed bespoke single version of the truth database to track and direct activity.
- Optimised the wind down of the organisation and infrastructure, remaining fully compliant with regulatory requirements as AuM decreased.
- Resolved legacy issues including established archiving and retrieval capability and acted as liquidator to achieve dissolution.
Pan-European Entity Restructure
- In order to deliver a stronger pan-European Wealth Management bank, free up capital, simplify the regulatory environment and facilitate standardisation of platform and optimisation of organisation, the bank opted to undertake a simultaneous cross border merger of 8 countries into one, using a first of its kind simultaneous cross border merger.
- We led the corporate transaction, supported the PMO and TOM development and provided point assistance to the Legal, Risk and Finance functions as required.
- The project was complex from a legal and cultural change perspective requiring detailed planning and rapid resolution of issues.
- Transactions were delivered enabling release of significant capital and facilitating operational cost improvements.
Market Exit Contingency Plan
- The client wished to exit from its Slovenian subsidiary and was investigating a share sale option. In case a share sale was not possible (e.g. if the buyer chose to purchase only part of the business), the bank engaged us to develop a contingency plan to meet regulatory requirements.
- We reviewed the balance sheet and, on an asset class basis, determined the optimal wind down approach and estimated the likely timeline and cost.
- We reviewed the operational infrastructure and prepared an outline plan for wind down with cost estimates.
- We prepared a fully costed contingency plan and supporting Board pack.
- The Bank eventually successfully executed a share sale and the contingency plan was never implemented.
Details of the entity providing services, legal and regulatory information in respect of the Teneo entity are also included in our engagement letters.
Teneo Financial Advisory (DIFC) Limited is authorised and regulated by the Dubai Financial Services Authority for the provision of Advising on Financial Products or Credit and Arranging Credit or Deals in Investment services
Specific information relating to our regulated entities which provide services to clients is detailed below:
|Registered Name||Legal Form||Registration Location and Reference||Registered Office||Data Protection||Regulator(s)||Professional Indemnity Insurance|
|Teneo Financial Advisory Limited||Limited Company||England & Wales, 13192958||5th Floor, 6 More London Place, London, SE1 2DA||UK - ZA920639||The Institute of Chartered Accountants in England and Wales (“ICAEW”) C008873136. All insolvency practitioners are licenced by the ICAEW. ICAEW Designated Professional Body licence for a range of investment business activities.||Details of the professional indemnity insurer can be provided on request.|
|Teneo Securities LLC||Limited Liability Company||USA - Delaware||280 Park Avenue, 4th Floor, New York, NY 10017||N/A||Financial Industry Regulatory Authority (FINRA) #151256. Securities and Exchange Commission (SEC).||Details of the professional indemnity insurer can be provided on request.|
Teneo Securities LLC’s Business Continuity Planning
Teneo Securities LLC has developed a Business Continuity Plan (“BCP”) on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our BCP.
The Firm has developed and installed a BCP in the case of any business disruption that causes the Firm to have limited or no communications with its employees or customers. Our plan anticipates two types of business disruptions, internal disruptions which affect only our Firm’s ability to do business (such as a fire in our building) and external disruptions that prevent the operation of securities markets or other firms (such as natural disasters or acts of war).
The Firm intends to stay in business during both internal and external disruptions due to the fact that the Firm employees can conduct Firm related business from alternate off-site physical locations and the Firm maintains an alternate location for the maintenance of its books and records. We anticipate that the Firm will recover from internal business disruptions within 24-48 hours. An outage due to an external business disruption may be longer and is beyond the control of the Firm. However, the Firm will endeavor to resume business as soon as it is possible for the Firm to establish business operations from alternate off-site physical locations.
The Firm’s BCP specifically addresses the following areas related to Firm operations:
- Data back-up and recovery (hard copy and electronic);
- All mission critical systems;
- Procedures to test and determine the Firm’s ability to do business (i.e., financial and operational assessments);
- Alternate communications between customers and the Firm;
- Alternate communications between the Firm and its employees;
- Alternate physical location of employees;
- Critical business constituent, bank, and counter-party impact;
- Regulatory reporting; and
- Communications with regulators.
If you have questions about our business continuity planning, you can contact us (212) 886-1600.