The China Banking Regulatory Commission's Circular on Matters concerning Regulating Private Lending and Maintaining Economic and Financial Order recently came into effect. The circular was formulated in accordance with various laws and measures and establishes the basis for clarifying credit rules and prohibiting illegal private lending. According to government officials, the circular will be implemented in three stages.
The funds of some participants of the Interbank Electronic Payments System (SPEI) were recently affected by a series of unprecedented cyberattacks. The Mexican Central Bank revealed that approximately $15 million (Ps300 million) had been involved in diverse irregular transfers, subject to investigation. The cybercriminals had identified a flaw in the system that permitted receivers of SPEI transfers to withdraw cash almost immediately after receiving the transfer so that the money could not be traced.
The past two years have seen corporate bonds emerge as a natural alternative to bank loans on the Swedish financial market. While traditional bank loans remain the first-choice financial solution for most corporations, demand for bonds has grown significantly over the past decade. Recently introduced national and European regulations have set out new information requirements for existing and new bond prospectuses.
The EU Payment Services Directive (PSD2) aims to enhance competition in otherwise traditional and closed industries. A draft of the new Payment System Act, transposing PSD2, was recently released for public consultation. The draft defines the information that banks must forward to third parties for each category of payment services and sets limits on forwarding more information than is expressly requested from a bank.
The Supreme Court recently confirmed the admissibility and validity of qualified subordination agreements included in general terms and conditions and with respect to consumer transactions. Further, the Supreme Court held that qualified subordination agreements – in particular, those relating to loan agreements – create a specific type of contract. This decision has a significant impact on standard bank loan transactions, especially in restructuring situations.
The Financial Crimes Enforcement Network recently issued new frequently asked questions regarding its customer due diligence (CDD) rule. The CDD rule applies to banks, among others, and includes four core elements of CDD, each of which should be included in anti-money laundering programmes.
The Bank of Italy recently commenced a public consultation on the proposed amendments to Regulation 285/2013 on remuneration policies in the banking sector, the main aim of which is to align the regulation with the European Banking Authority Guidelines of December 2015 and ensure compliance with Articles 74(3) and 75(2) of the EU Capital Requirements Directive. The consultation will end on May 14 2018.
A recent Luxembourg District Court judgment has confirmed the well-established, flexible and creditor-friendly environment offered by the Collateral Act. The court ruled that the enforcement of a pledge cannot be set aside, except in the case of clearly established fraud. The main takeaway from the decision is the confirmation of the possibility offered by the act to enforce a pledge without any payment default and in case of a breach of a financial covenant.
The Administrative Council for Economic Defence (CADE) and the Central Bank recently entered into a memorandum of understanding. This initiative strengthens the relationship between the two authorities and promotes greater cooperation among them for the analysis of merger cases and anti-competitive practices by financial institutions. It also represents an important step forward, signalling the end to the longstanding dispute between CADE and the Central Bank over jurisdictional conflicts.
The China Banking Regulatory Commission (CBRC) recently issued its Interim Measures for the Equity Management of Commercial Banks. The measures have tightened the CBRC's regulation of the information disclosure and reporting requirements imposed on material shareholders that have a significant impact on the operation and management of commercial banks established in China.
The president recently enacted the Financial Technology Institutions Law. The Senate had unanimously approved the bill on the law in December 2017 and sent it to Congress, which made no changes. The law seeks to build a regulatory framework that will encourage the development of innovative financial services, increase the level of competition and financial inclusion and place Mexico at the forefront of the industry.
The Supreme Court recently clarified its position on sureties payable on first demand and confirmed its view on the interpretation of contractual undertakings by which one party assumes a personal liability for a third-party debt. Considering the significant different legal consequences for a beneficiary's position following a qualification as either an abstract guarantee or an accessory surety, the guidelines provided by the court are of the utmost importance.
The Reserve Bank of India and the Ministry of Electronics and Information Technology recently established a new regulatory framework for setting limits on and payments of merchant discount rates and encouraging digital payments. Rates will now be determined based not only on the basis of transaction value, but also on turnover. However, in its effort to curb transaction costs for merchants, the government risks imposing significant charges on other system participants.
The new Financial Services Authority Regulation on the Single Presence Policy in Indonesian Banking was issued in July 2017. The policy aims to ensure that a single entity does not simultaneously hold a controlling interest in more than one bank. Therefore, a controlling shareholder of more than one bank is required to merge or consolidate its controlled banks, establish a bank holding company or establish a holding function.
The Board of Governors of the Federal Reserve System has announced revisions to the Annual Report of Foreign Banking Organisations (FR Y-7) which will enable foreign banking organisations (FBOs) to certify their compliance with US risk committee and home country capital stress testing requirements under Regulation YY. The FR Y-7 is an annual report submitted by qualifying FBOs to provide financial, organisational, shareholder and managerial information to the board.
The Tubingen Regional Court recently held that negative interest on a consumer's existing cash deposits imposed by a German bank by unilaterally changing the bank's general terms and conditions was unlawful. According to the court, the defendant bank violated the rules of the general terms and conditions regime because it did not differentiate between existing deposits and newly deposited cash.
The Financial Services Authority (OJK) has introduced rules for the employment of expatriates and the transfer of knowledge in the banking sector, pursuant to which it has taken over the supervisory role previously performed by Bank Indonesia. Therefore, in order to employ an expatriate, a bank must now obtain OJK approval and submit reports on its expatriate staff. An expatriate's work permit will be processed by the Ministry of Manpower only after having been approved by the OJK.
With the Competition Law's recent entry into force, the legislature has finally established a clear legal framework by defining the concept of a 'financial lease' and the consequences for banks (or leasing companies) and clients following a breach of contract. These provisions make financial leases a more transparent tool with the aim of boosting their appeal and increasing investment by Italian companies, thus fostering economic growth.
There were a number of court precedents in 2017 concerning financial transactions. For example, a recent non-binding collegiate court precedent broadened the scope and source of information that judges should use to analyse and determine the existence of usury, while another validated judges' authority to use the annual interest rate published by companies that engage in vehicle financing. Further, a binding Supreme Court precedent dealt with the maturity date of promissory notes.
The US Court of Appeals for the Ninth Circuit recently held that California's statute prohibiting credit card surcharges violated the First Amendment as applied to the proposed surcharge practices of the merchant-plaintiffs. The Ninth Circuit used the same reasoning as a recent Supreme Court case to hold that California's surcharge ban regulated speech rather than conduct, therefore posing First Amendment concerns.