Banking and Finance Law Guide

What is Banking and Finance Law?

Banking and finance law focuses on the contractual relationship between lenders and borrowers. In all financial transactions, the main aim is to negotiate and manage this relationship to ensure the represented party’s interests are met both legally and commercially.

Different areas in this vast topic include the following:

• Bank Lending: A personal or business loan agreement where the bank lends money to a borrower that come attached with documented repayment terms
• Property Finance: A loan is sought and agreed for the purposes of enabling a borrower to obtain a property or develop the land of which a property will be built. Typically, this will be acquired through a mortgage
• Project Finance: A longer-term, multi-phased and often multi-faceted infrastructure project that involves public services. The amount is borrowed to carry out the project to and is paid back once it starts to bring in money
• Acquisition Finance: A loan borrowed by one company to provide it with the funds to purchase another company. Leveraged finance also comes under this area, whereby a borrower lends a considerable sum of money to meet the cost of acquisition requirements without committing to paying its own money
• Assets Finances: The lender will take security over the specific assets purchased (usually considerable sums)
• Derivatives: Understanding and managing currency rates during a transaction
• Capital markets: When a transaction takes place, a borrowing entity gives bonds to investors
• Islamic finance: Shari’a law prevents the collection and payment of interest on a loan. Islamic finance specialists work with Muslim borrowers, lenders and investors to ensure banking and financial arrangements are compliant with Shari’a law

What do Banking and Finance Lawyers Do?

Banking and finance law consists of multiple areas that are technically-complex and constantly evolving. As a result, lawyers in this field often specialise in a particular area. A banking and finance lawyer will either represent the borrower or the lender, and the majority of their role will focus on the transactional elements of arranging deals.

Regardless of the specific area of banking and finance, lawyers in this field support with negotiations, structuring and handling financial arrangements, and conducting due diligence.

A banking and finance lawyer will need to balance compliance by adhering to all applicable laws and regulations (which are often across multiple jurisdictions) and mediate parties by helping them reach mutually-satisfactory terms.

Another element of the role of a banking and finance lawyer is to take an active interest in future trends that may influence a transaction. After applying analytical fact-checking and keen attention to detail, a banking and finance lawyer then needs to be able to communicate information in a clear and succinct way.

Corporate Finance Law

Corporate finance law is an area of banking and finance law that concentrates on economics from the perspective of entrepreneurship and business. Many startups, medium-businesses looking to grow, and large companies exploring acquisition and merger options require funding.

Businesses will, therefore, be introduced to corporate finance law to obtain the necessary funds to inject capital for business operations. Governing these financial transactions is a body of law that both constructs and regulates borrowing and lending of this nature.

Corporate finance law is a comprehensive body of law that draws upon multiple other areas to structure financial deals.

These areas of law include:

• Contract law
• Company law
• Corporate insolvency law
• Securities and takeovers

International Banking and Finance Law

International banking law delves into legal issues surrounding global banking requirements, regulations and the complexities associated with understanding how these overlap and operate alongside each other.

The specific area of banking and finance law also concerns anti-terrorist laws, money laundering and financial crime prevention. Set in the current financial technology sphere, where post-2008, financial transactions sit within specific regulatory frameworks, national and international banking law incorporates:

• Contract law
• Derivatives
• Corporate finance
• Private equity deals
• Banking lending practices
• Banking regulations

International banking law explores default, negotiations, remedies, mediation and enforcement. International banking lawyers must work with specific financial service regulations and legislation that sets out how banking clients must handle financial matters in order to comply with relevant laws.

How to Become a Banking and Finance Lawyer

To become a banking and finance lawyer, you’ll need to demonstrate a certain set of skills, interests and, if possible, related work experience. Read on to find out how to increase your chance of landing a training contract in banking and finance law.

What Sort of Personality Would Suit a Career in Banking and Finance Law?

Some key attributes would be:

• Excellent attention to detail and the fine print of agreements
• A good understanding of the different types of loan and the way that banks structure them
• The ability to understand the ambitions and goals of your client in order to advise them on whether the risks and benefits of a deal are worthwhile and ultimately in their best interests
• Good personal skills to build and maintain relationships with clients as well as being able to condense complex information into practical advice that a client can understand and act on.

Routes into Becoming a Banking and Finance Lawyer

You could either choose to take the graduate route and complete an undergraduate degree in law, or in another subject and then a conversion course, before taking the LPC and getting a training contract. Alternatively, you could do a legal apprenticeship to qualify as a solicitor or become a chartered legal executive and then specialise in one of the areas of banking and finance law.

Banking and Finance Work Experience

Work experience with banks, accounting firms or any other company demonstrating an interest in finance would look good for this career path and also give you the chance to develop commercial awareness. You should also consider going on a vacation scheme with a firm that specialises in banking and finance law.

Next: Read our guide to Commercial Law