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Aspiring Lawyers - Interviews & Vacation Schemes
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Commercial Awareness Update - July 2019!
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<blockquote data-quote="Angel" data-source="post: 11906" data-attributes="member: 980"><p><strong><u>3. Deutsche Bank’s radical restructuring [USER=1]@Jaysen[/USER]</u></strong></p><p></p><p><strong>The Story </strong></p><p></p><p>Last Sunday, Deutsche Bank announced a radical turnaround plan that would see it cut 18,000 jobs by 2022, exit its global equities business and move billions of toxic assets to a separate unit -- a so-called ‘bad bank’.</p><p></p><p><strong>Impact on Businesses and Law Firms</strong></p><p></p><p>Is it too little too late? The German lender failed to clean up its balance sheet properly after the financial crisis. It has since been plagued by regulatory investigations, fines and stiff competition. It’s no wonder that its recent attempt to merge with rival lender Commerzbank failed.</p><p></p><p>It’s not only Deutsche Bank either. Other European banks failed to aggressively reform after the crash. They’ve also suffered from negative interest rates, slow growth and fragmentation within the Eurozone, which have stifled their profitability. While these banks have stumbled, US rivals like Goldman Sachs and Morgan Stanley have increased their market share in Europe.</p><p></p><p>Deutsche Bank will now go back to its roots, focusing on European companies and retail-banking customers. The plan is to reduce costs while leaving enough money to fund the restructuring, so it doesn’t have to raise more capital. Its ‘bad bank’ will take in the assets the bank no longer wants, which can then be sold or wound down.</p><p></p><p>Lawyers play an important role in the restructuring process. Take the job cuts, for example. Lawyers must advise Deutsche Bank on making staff redundancies across multiple jurisdictions. And this can be delicate; how will they be consulted? Will they be offered financial compensation? How can they avoid potential claims for unfair dismissal?</p><p></p><p>Germany will also be an interesting case study. The country has strict employment laws that are supported by powerful unions. Yet in Frankfurt, legislation was recently introduced to make it easier to fire high-earning bank officials as Germany sought to benefit from the fallout of Brexit. Deutsche Bank could be the first major test case.</p><p></p><p><strong><u>4. Christine Largarde's nomination as the next ECB president [USER=980]@Angel[/USER]</u></strong></p><p></p><p><strong>The Story</strong></p><p></p><p>Last Tuesday, Christine Lagarde was nominated to be the new European Central Bank (“ECB”) president. The ECB in the Eurozone is analogous to the role of the Federal Reserve in the US. It sets monetary policy and supervises the banking and financial activities for the 19 countries that adopt the common European currency (Euro) – aka, the Eurozone. Therefore, it plays a crucial role in maintaining the stability of prices and inflation within the Eurozone.</p><p></p><p><strong>Impact on Businesses and Law Firms</strong></p><p></p><p>Financial markets across Europe rallied upon news of her nomination. The response from business leaders and central banks on Lagarde’s ECB nomination have been positive. Investors take the view that Lagarde will retain current ECB President Mario Draghi’s policies that support economic growth. Put simply, this is achieved by adopting expansionary monetary policy - the process in which a central authority (in the case, the ECB) influences the economy of its province (the Eurozone) by controlling the money supply or the interest rates in the zone (in this case, to keep interest rates low to stimulate the economy).</p><p></p><p>Commercial lawyers, especially those who specialise in capital markets, will need to stay up-to-date with the nomination. The role of capital market lawyers includes helping clients raise funds in the financial markets. In doing so, they work closely with bankers to advise on the legal and regulatory aspect of a transaction. In the likely event that Lagarde is appointed as the new ECB president, capital markets lawyers would need to be prepared for changes in policies, a shift in investors’ confidence (for better or for worse), and alterations to regulations that must be complied with.</p></blockquote><p></p>
[QUOTE="Angel, post: 11906, member: 980"] [B][U]3. Deutsche Bank’s radical restructuring [USER=1]@Jaysen[/USER][/U][/B] [B]The Story [/B] Last Sunday, Deutsche Bank announced a radical turnaround plan that would see it cut 18,000 jobs by 2022, exit its global equities business and move billions of toxic assets to a separate unit -- a so-called ‘bad bank’. [B]Impact on Businesses and Law Firms[/B] Is it too little too late? The German lender failed to clean up its balance sheet properly after the financial crisis. It has since been plagued by regulatory investigations, fines and stiff competition. It’s no wonder that its recent attempt to merge with rival lender Commerzbank failed. It’s not only Deutsche Bank either. Other European banks failed to aggressively reform after the crash. They’ve also suffered from negative interest rates, slow growth and fragmentation within the Eurozone, which have stifled their profitability. While these banks have stumbled, US rivals like Goldman Sachs and Morgan Stanley have increased their market share in Europe. Deutsche Bank will now go back to its roots, focusing on European companies and retail-banking customers. The plan is to reduce costs while leaving enough money to fund the restructuring, so it doesn’t have to raise more capital. Its ‘bad bank’ will take in the assets the bank no longer wants, which can then be sold or wound down. Lawyers play an important role in the restructuring process. Take the job cuts, for example. Lawyers must advise Deutsche Bank on making staff redundancies across multiple jurisdictions. And this can be delicate; how will they be consulted? Will they be offered financial compensation? How can they avoid potential claims for unfair dismissal? Germany will also be an interesting case study. The country has strict employment laws that are supported by powerful unions. Yet in Frankfurt, legislation was recently introduced to make it easier to fire high-earning bank officials as Germany sought to benefit from the fallout of Brexit. Deutsche Bank could be the first major test case. [B][U]4. Christine Largarde's nomination as the next ECB president [USER=980]@Angel[/USER][/U][/B] [B]The Story[/B] Last Tuesday, Christine Lagarde was nominated to be the new European Central Bank (“ECB”) president. The ECB in the Eurozone is analogous to the role of the Federal Reserve in the US. It sets monetary policy and supervises the banking and financial activities for the 19 countries that adopt the common European currency (Euro) – aka, the Eurozone. Therefore, it plays a crucial role in maintaining the stability of prices and inflation within the Eurozone. [B]Impact on Businesses and Law Firms[/B] Financial markets across Europe rallied upon news of her nomination. The response from business leaders and central banks on Lagarde’s ECB nomination have been positive. Investors take the view that Lagarde will retain current ECB President Mario Draghi’s policies that support economic growth. Put simply, this is achieved by adopting expansionary monetary policy - the process in which a central authority (in the case, the ECB) influences the economy of its province (the Eurozone) by controlling the money supply or the interest rates in the zone (in this case, to keep interest rates low to stimulate the economy). Commercial lawyers, especially those who specialise in capital markets, will need to stay up-to-date with the nomination. The role of capital market lawyers includes helping clients raise funds in the financial markets. In doing so, they work closely with bankers to advise on the legal and regulatory aspect of a transaction. In the likely event that Lagarde is appointed as the new ECB president, capital markets lawyers would need to be prepared for changes in policies, a shift in investors’ confidence (for better or for worse), and alterations to regulations that must be complied with. [/QUOTE]
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