Fides Weekly Update – 6th November 2015

Hello again, and welcome to your instalment of the Fides Weekly Update – the latest legal, business and financial news as compiled by our Research Team. Tweet us @Fides_Search with your thoughts, comments and feedback – we would love to hear from you!

This week:

1) Things go from bad to worse at Deutsche Bank

After a record €6.1bn third quarter loss was announced by the bank last week, things went from bad to worse for Germany’s biggest lender on Thursday, when news broke that the bank agreed to pay a $258m (£168m) settlement to US regulators for sanctions violations.

From 1999 to 2006 the bank processed nearly $11bn (£7bn) in payments through its New York branch to clients in Sudan, Iran, Burma, Libya and Syria. The settlement is split between the New York Department of Financial Services (DFS) and the Federal Reserve, who will each receive $200m (£130m) and $58 (£38m) respectively. This comes only two weeks after the DFS announced a $787m (£512m) settlement with France’s Crédit Agricole for similar violations.

2) Merger Central

News emerged on Monday that global behemoth Dentons plans to enter a three-way Pacific merger with Australian firm Gadens and Singaporean firm Rodyk & Davidson, subject to a partner vote.

Already the largest firm in the world after its merger with Chinese firm Dacheng in January, the deal would see Dentons expand its reach in Asia Pacific, enter Australia for the first time and add over 500 lawyers from Gadens and 200 lawyers from Rodyk & Davidson. As reported in The Lawyer in June, Dentons CEO Elliot Portnoy and Chairman Joe Andrew revealed that the firm was in talks with 21 firms globally in a bid to rapidly expand operations.

This comes a week after Wisconsin-based Foley & Lardner emerged as the leading candidate for Eversheds US merger, which was heavily backed by a partnership vote last June.

We especially enjoyed reading this article from Katie King at Legal Cheek comparing the proposed mergers.

3) Credit Suisse, Freshfields and HFW get wrists slapped by UK Takeover Panel

The UK Takeover Panel made a bold move on Thursday by publicly censuring Credit Suisse alongside law firms Freshfields Bruckhaus Deringer and Holman Fenwick Willan for breaching UK Code of Conduct rules, the FT reports.

The misconduct was rooted in transactions carried out in the formation of Bumi Plc, the Indonesian coal group, revived from near bankruptcy by Nat Rothschild. The panel criticised a failure to disclose that Bumi’s founding shareholders, the Bakrie Group, and Indonesian shareholder Rosan Roeslani, acted as concert parties in acquiring stakes totalling more than 30% in Bumi’s predecessor company, given they had close ties to each other when the deal was announced in 2011.

J.P. Morgan have also been criticised for their involvement in the deal, although no public censure has been sanctioned.

This rare ruling by the UK Takeover Panel is seen as a serious matter in investment banking, and will most likely cause the banks and law firms in question to re-evaluate their conduct in order to prevent repetition.

4) The Return of the Mega-Deal?

US companies have spent a record $1.8 trillion on mergers and acquisitions (M&A) this year, figures released this week from Dealogic show. This includes Visa Inc’s $23.4bn (£15bn) purchase of Visa Europe on Monday, with strong deal activity in the US fuelling global M&A.

A worldwide total of $4 trillion has been spent on M&A this year so far, which is just behind the all-time high of $4.6 trillion recorded in 2007. Of this, a record $1.9 trillion has been spent acquiring US companies. Such an uptick in deal activity has been attributed a strong dollar, slowing US exports and a rush by firms to offload cash ahead of the rise in interest rates.

Despite this, regulatory concerns and competition from competitors continue to play a decisive role in the success of deals according to EY’s Global Capital Confidence Barometer, released on Monday. The report revealed that 73% of the global executives surveyed had walked away from a prospective M&A deal in past last 12 months that they perceived to be too risky. The report also cites political instability, as well as currency and commodity volatility as key economic risks to dealmaking activity.

Thus, while mega deals remain prominent, the economic and business risks associated with such transactions suggests that the real action in M&A deals going forward is with medium-size firms.

5) New Managing Partner at Linklaters elected

The race to find the next Managing Partner at Linklaters came to an end on Tuesday as the firm’s global banking head Gideon Moore was appointed to the position, with his four-year term beginning on 1 January.

Moore was selected by the magic circle firm’s partnership board, after having eliminated finance and projects head Michael Kent, Western Europe managing partner Pieter Riemer and co-head of operational intelligence Tom Shropshire from the running.

It seems the firm are looking forward to the change in culture, as Moore is quoted in Legal Week to be ‘a great leader, good humoured and fairly normal’. He began career at Clifford Chance and is taking over from current Managing Partner Simon Davies, who is stepping down a year early to join Lloyds as Chief Legal, People and Strategy officer.

The firm’s next election will be to find their new senior partner, which the Lawyer believes is a choice between corporate partners Charlie Jacobs and Jean-Pierre Blumberg.

Stay tuned for next week’s edition of the Fides Weekly Update.

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