Corporate lawyer in financial services: complex transactions, specialist advice

Financial corporate law: where specialisation is not optional

The corporate and contractual transactions of the financial sector do not admit generalist approaches. Syndicated financing contracts with an LMA framework, derivatives documented under ISDA/CMOF, securitisations, repos, and financial collateral arrangements are instruments with their own legal technique that requires specific knowledge. And when the regulatory dimension is added — regulatory approval for an acquisition, MiFID II compliance in product distribution, corporate governance requirements for supervised entities — specialisation becomes indispensable.

At BMC we have corporate lawyers with financial sector experience: we know the international contractual standards (LMA, ISDA, GMRA), Spanish and European regulatory framework, and market practice in M&A, financing, and restructuring transactions in the banking, insurance, and asset management sectors.

Financing contracts: the language of the market

Major corporate financing transactions are documented using the LMA framework, the European standard that defines the conditions of syndicated loans. The LMA facility agreement sets the financing terms, financial and conduct covenants, events of default, and the voting mechanisms among syndicate banks. Negotiating effectively in this environment requires knowing the standard, understanding what is market practice and what is unusual, and defending the client’s positions with technical arguments that the counterparty recognises.

Financial sector M&A: the additional complexity of regulatory approval

Acquisitions of financial institutions carry an additional layer of complexity absent from other sectors: regulatory approval. The notification and approval process before the Bank of Spain, the CNMV, or the ECB can take several months and requires the submission of extensive documentation about the acquirer, its business plan for the target entity, and the financing structure of the transaction. Managing this process in parallel with SPA negotiation, coordinating with the regulator and the counterparty’s advisers, is one of the primary challenges of financial sector M&A.

Banking litigation: defending complex technical positions

Banking disputes — over investment products, derivatives, failed financings, or insurance contracts — require combining technical financial knowledge with procedural strategy. The Supreme Court has established relevant criteria on the distribution of complex products and on the invalidity of clauses in financial contracts that must be understood in order to anticipate the probable outcome of each dispute and design the most efficient defensive strategy.

Corporate governance in regulated financial entities

Financial entities subject to prudential supervision — banks, investment firms, insurance companies, payment institutions — must comply with corporate governance requirements that exceed those applicable to ordinary commercial companies. The Bank of Spain, CNMV, and DGS each publish circulars setting out specific governance expectations for their regulated entities.

Board composition requirements. CRD V (Capital Requirements Directive V) requires that the management body of significant institutions includes a minimum number of independent members, appropriate diversity of background and expertise, and a sufficient proportion of members with collective knowledge of risk, internal controls, and IT. The Fit and Proper assessment for each board member must be documented and submitted to the supervisory authority.

Risk and audit committees. Significant institutions must establish dedicated risk committees and audit committees with specific competences and minimum meeting frequencies. The composition of these committees — which must include independent board members — and their interaction with internal audit, compliance, and risk management functions is a recurring area of supervisory examination.

Remuneration policy. The remuneration policy must be approved annually by the general meeting (for listed entities) or by the shareholders. For entities subject to EBA guidelines, the policy must address variable pay deferral, instrument requirements, malus and clawback, and the ratio of variable to fixed pay for identified staff. BMC advises on the legal structuring of remuneration policies that satisfy regulatory requirements while providing market-competitive compensation frameworks.

Regulatory capital and shareholders’ agreements in financial groups

Financial groups with multiple regulated subsidiaries face specific challenges in structuring shareholders’ agreements that are compatible with the regulatory capital requirements applicable to each subsidiary.

Capital requirements for banks (CRD V/CRR II), insurance companies (Solvency II), and investment firms (IFD/IFR) are calibrated to each entity’s risk profile and are calculated on an individual and consolidated basis. Shareholders' agreement provisions that restrict capital distributions, require mandatory shareholder support, or create quasi-equity obligations may be relevant for regulatory capital purposes — as additional Tier 1 or Tier 2 capital instruments, or as implicit recapitalisation commitments that regulators may include in their capital assessment.

BMC advises financial groups on the corporate law structuring of intragroup arrangements with regulatory capital implications, coordinating with the entity’s prudential advisory team to ensure that legal structures are consistent with the capital treatment sought.

Consumer financial services and MiFID II compliance

Financial institutions providing investment services to retail clients are subject to extensive MiFID II product governance, suitability assessment, and disclosure requirements. The CNMV actively enforces these requirements and has imposed significant fines on institutions that sold complex financial products to customers without adequate suitability assessment or product disclosure.

Key legal obligations in consumer financial services: best execution policies, appropriateness testing for non-advised services, suitability assessment for portfolio management and investment advice, inducement disclosure, and the product oversight and governance regime for manufacturers and distributors of investment products. BMC advises on the legal documentation framework for each of these requirements and represents institutions in CNMV enforcement proceedings.

Financial sector insolvency and crisis management

Financial institutions in Spain are subject to a special insolvency regime that departs significantly from the general Ley Concursal framework. Credit institutions under the supervision of the Bank of Spain and the ECB are subject to the BRRD (Bank Recovery and Resolution Directive) transposed in Spain by Law 11/2015 on the Recovery and Resolution of Credit Institutions.

The BRRD framework gives resolution authorities (primarily the FROB — Fondo de Reestructuración Ordenada Bancaria) extensive powers to intervene in failing banks: write-down or conversion of capital instruments, bail-in of creditors, sale of business, bridge institution establishment, and asset separation. Legal work in a financial institution resolution scenario includes: advising creditors and investors on the hierarchy and treatment of their claims, challenging FROB decisions before the Audiencia Nacional, advising on claims for financial compensation where resolution decisions have disproportionately affected individual stakeholders, and advising on the contractual consequences of resolution triggers in ISDA and LMA agreements.

For insurance companies, the DGSFP has early intervention, rehabilitation, and liquidation powers under Law 20/2015. BMC advises insurers and their stakeholders on the legal aspects of solvency challenges and regulatory intervention.

AML and financial crime prevention in the financial sector

Financial institutions in Spain are Subject Persons (sujetos obligados) under Law 10/2010 on the Prevention of Money Laundering and Terrorist Financing, with the most extensive AML obligations in the Spanish legal order. The SEPBLAC (Servicio Ejecutivo de la Comisión de Prevención del Blanqueo de Capitales e Infracciones Monetarias) supervises AML compliance and has the power to impose fines of up to €10 million for serious violations, and to recommend suspension of licences for the most serious systemic failures.

Key AML legal obligations for financial institutions include: a comprehensive AML risk assessment and policy framework, customer due diligence (CDD) and enhanced due diligence (EDD) procedures, Suspicious Activity Reporting (SAR) channel and management, designated compliance officer (responsable de cumplimiento) with direct Board reporting line, SEPBLAC annual declaration filing, and training programme for all staff involved in customer-facing or transaction activities.

BMC advises financial institutions on the legal structure of their AML compliance frameworks, provides representation in SEPBLAC sanction proceedings, and prepares the legal documentation for SAR reporting decisions where potential criminal exposure requires careful management.

Corporate criminal liability and D&O insurance for financial institutions

The 2010 Penal Code reform extended corporate criminal liability to legal entities — financial institutions are subject to prosecution for offences including money laundering, market abuse, fiscal fraud, and distribution fraud. Since 2015, the criminal liability exemption under Article 31 bis CP requires the institution to demonstrate that it had adopted and genuinely implemented a compliance programme with controls appropriate to the offence committed.

D&O (Directors and Officers) insurance policies for financial institution boards must be reviewed to ensure that coverage extends to regulatory investigations, supervisory proceedings, and CNMV/Bank of Spain enforcement actions — not just civil court liability. The interaction between D&O coverage and the institution’s own criminal compliance programme is a legal structuring question that BMC advises on in conjunction with insurance advisers.

Senior managers and board members of significant institutions also face personal liability under the EBA fit and propriety framework — disciplinary proceedings by the Bank of Spain or CNMV for conduct failures can result in individual disqualification, which is separately insurable but requires specific personal liability coverage beyond the standard D&O policy.

Financial sector M&A: post-acquisition integration legal issues

The legal work in a financial institution acquisition does not end at closing. Post-acquisition integration — particularly where the target entity has a different regulatory structure, customer base, or IT infrastructure — raises specific legal issues:

Employment law in the banking sector. Transfer of business provisions under Article 44 of the Workers’ Statute apply to financial institution acquisitions, and the collective bargaining agreements applicable to the target institution’s workforce may create obligations that differ from those of the acquirer’s workforce. Banking sector CBAs are among the most complex in the Spanish market. BMC advises on the labour law aspects of financial institution integration.

Client notification and consent requirements. The transfer of investment services agreements, deposit contracts, and insurance policies from the acquired entity to the acquirer may require client notification, in some cases individual consent. MiFID II and insurance regulations have specific rules on the modification of client relationships in the context of corporate restructuring — CNMV and DGSFP notification requirements must be met.

Branch network rationalisation. When an acquisition involves significant branch overlap, the rationalisation programme raises employment (ERE/ERTE), commercial (lease terminations), and regulatory (notification of branch closures to Bank of Spain) legal issues that must be managed in coordination.