Following a number of recent trips to various European markets, it is clear that the evolving European regulation within financial services has opened a door for traditional borrowers to become lenders within the European marketplace. The shift asset managers and private equity houses have made into the lending market has given rise to a new form of ‘shadow banking’.
Lawyers across the continent who have seen their investment bank clients hamstrung by increased regulations are breathing a sigh of relief, and are gearing up for the new wave across Europe as investment from the US, UK and Continental European based lenders increases.
The good news for law firms is that whilst shadow banking has firmly arrived in the UK and is very much present in Germany, markets such as Italy are just getting started. Whilst the likes of Blackstone and BlackRock are well on their journey, domestic funds are just beginning to evolve, which is good news for the lawyers on the ground in these jurisdictions. Whilst domestic regulations and legislation are seemingly more challenging in certain markets, these domestic businesses will provide local lawyers with domestic clients to cultivate and provide a balance between local and network origination.
There has been a lot said about the new dawn of securitisation across Europe and from our discussions with those within the banks and alternative lenders, it is clear that in some European markets the dam has been opened, and in others it is only a matter of time. As regulations and legislations continue to evolve, the competition in the shadow banking marketplace will only increase. There is a clear demand for securitisation and structured finance lawyers, and this will continue to come into focus, but those who have their finger on the pulse of the regulation and regulatory change will have a real chance to prosper in the coming years.
This new method of providing liquidity to European markets is rising like the tide across Europe, and for law firms with a foothold in the financial services marketplace, the only thing to do is try and catch the wave.