The law and practice of international banking / Charles Proctor.
2010
K1066 .P76 2010 (Map It)
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Author
Title
The law and practice of international banking / Charles Proctor.
Published
Oxford ; New York, N.Y. : Oxford University Press Inc., 2010.
Call Number
K1066 .P76 2010
ISBN
9780199291861 (hbk. : alk. paper)
0199291861 (hbk. : alk. paper)
0199291861 (hbk. : alk. paper)
Description
lxxxi, 844 pages ; 26 cm
System Control No.
(OCoLC)636563971
Summary
A comprehensive and authoritative book written from the perspective of current banking law and practice. It pays particular attention to the needs of legal practitioners in international finance centres and, with a focus on English law, draws extensively on cases from Commonwealth jurisdictions for a comparative approach.--[source unknown].
Note
A comprehensive and authoritative book written from the perspective of current banking law and practice. It pays particular attention to the needs of legal practitioners in international finance centres and, with a focus on English law, draws extensively on cases from Commonwealth jurisdictions for a comparative approach.--[source unknown].
Bibliography, etc. Note
Includes bibliographical references and index.
Record Appears in
Table of Contents
Table of Cases
xxxv
Tables of Legislation
lxvii
List of Abbreviations
lxxix
A.
REGULATORY MATTERS
Introduction
1.
The Regulation of Deposit-Taking Business
Introduction
1
The History of Banking Regulation in the United Kingdom
4
Introduction
4
Deposit-Taking as a Regulated Activity
9
Introduction
9
Acceptance of Deposits
10
Deposits
13
Accepting Deposits
14
Carrying on a Business
15
In the United Kingdom
16
Exempt Persons
19
Consequences of Contravention
20
The Authorization Procedure
22
Powers of the FSA
26
EEA Firms
27
2.
EU Banking Law
Background to the EU Banking Directives
2
The Deposit-Taking Prohibition
9
The Authorization Process
11
The Treaty Freedoms---General Considerations
13
The Right to Establish a Branch
16
The Right to Provide Services
17
Provision of Services from within the Home State
18
Free Movement of Capital and Banking Services
22
The Commission Interpretative Communication
25
Conclusions
29
3.
The Conduct of Retail Banking and Investment Business
Scope of BCOBS
4
Application
4
Communications with Customers
9
Distance Marketing
11
Information Requirements
17
Post Sale Requirements
22
Cancellation
23
Investment Services
26
Introduction
26
Scope of MiFID
28
MiFID---Overview
30
Client's Best Interests
34
Client Categorization
36
Information Requirements
38
Client Agreements
39
Client Money
41
Suitability
43
Appropriateness
46
Conflicts of Inerest
47
Best Execution
50
4.
The Regulation of Lending Business
Consumer Credit
2
Introduction
2
Regulated Agreements
5
Types of Consumer Credit Agreements
7
Exempt Agreements
9
The Effect of Regulation
13
The Licensing Requirement
15
Advertising
23
Contents of Agreements and Formalities
25
Matters arising during the Currency of the Contract
30
Court's Powers of Intervention
38
Recent Reforms---The Consumer Credit Directive
40
Mortgage Regulation
43
Introduction
43
The Scope of Regulation
44
The Nature of the Regulation
52
The Lending Code
55
5.
The Regulation of Payment services
Implementation of the Payment Services Directive
4
Payment Services
7
The Definition
7
Exclusions
11
Territoriality
14
The Authorization Requirement
17
Authorized Payment Institutions
20
Introduction
20
Capital Requirements for Payment Institutions
24
Small payment Institutions
26
Ancillary Business
28
Passporting
29
Conduct of Business Requirements
34
Segregation Requirements
35
Information Requirements
40
Scope of Requirements
42
Single Payment Service Contracts
46
Framework Contracts
48
Common Provisions
53
Rights and Obligations of providers and Users
54
Scope
55
Charges for Transactions
56
Authorization of Payment Transactions
57
Limits and Use of Payment Instruments
61
Misuse of Payment Instruments
65
Time Limits
67
Evidence and Liability for Unauthorized Transactions
68
Execution of Payment Transactions
76
Execution Time and Value Date
82
Liability
86
Access to Payment Systems
87
Powers of the FSA
89
The Single Euro Payments Area
90
Introduction
90
The Aims and Objectives of SEPA
93
The Role of the EPC
96
The Benefits of SEPA
97
Progress with SEPA
98
Charges for Cross-Border Payments
100
Information on the Payer
104
6.
Capital Adequacy, Liquidity, and Large Exposures
Capital Adequacy---The Broad Framework
5
The Basel Standards
8
The Basel Committee on Banking Supervision
8
Basel II
17
Introduction
17
Pillar One
Eligible Capital
23
Risk-Weighted Assets
28
Introduction
28
The Standardized Approach
29
The Internal Ratings-Based Approach
33
Credit Risk Mitigation
40
Introduction
40
Common Principles
42
Funded Credit Protection
44
Unfunded Credit Mitigation
47
Market Risk
50
Operational Risk
52
Pillar Two
Supervisory Review
55
Pillar Three
Market Discipline
56
Reform of Basel II
57
Liquidity
60
Large Exposures
63
Conclusions
69
7.
Money Laundering Legislation
International Background
6
International Law
6
Community Law
8
Overview of the United Kingdom Regime
10
Legislation
10
Role of the Financial Services Authority
13
Role of Market Associations
15
The Money Laundering Regulations 2007
17
Customer Due Diligence
18
Record keeping
21
Policies and Procedures
23
Internal Training Procedures
25
Proceeds of Crime Act 2002
28
`Criminal Property' and `Criminal Conduct'
30
Concealing Criminal Property
37
Acquisition, Use, and Possession of Criminal Property
40
Arrangements Relating to Criminal Property
42
The Regulated Sector Offence
47
The Disclosure Defence
52
The `Reasonable Excuse' Defence
59
The Foreign Legality Defence
62
The `De Minimis' Defence
65
Offences by the MLRO
67
Tipping off---Regulated sector
70
Terrorist Financing
74
Introduction
74
`Terrorism' and `Terrorist Property'
76
The Offences
78
Civil Consequences of money Laundering Legislation
83
Receipt of Funds
85
Suspicion Arising in Relation to Funds already Held
90
Dealings with the Customer in Relation to POCA
93
8.
The Market Regulators
The Financial Services Authority
4
History and Functions of the FSA
4
Rule-making and Other Powers
7
The FSA Handbook
8
The Bank of England
12
History and Functions of the Bank
12
Stability of the Financial system
18
Monetary Policy
24
The Treasury
29
History and Functions of the trasury
29
Role of the Treasury
31
Current Reforms
34
The European Framework
38
European Systemic Risk Board
40
European Systemic of Financial Supervisors
45
The EU Memorandum of Understanding
49
International Developments
51
Conclusions
55
B.
MERGER, REORGANIZATION, AND INSOLVENCY OF BANKS
9.
UK Bank Mergers and Business Transfers
Effect of Part VII
4
Scope of Part VII
7
Procedure under Part VII
13
Effect of Court Sanction
18
`Property' and `Liabilities'
21
The Cross-Border Mergers Regulations 2007
25
10.
Foreign Bank Mergers
Recognition of the merger
5
The Transferred Assets and Liabilities
17
Consequences for the Transferor
22
Consequences for Transaction Counterparties
24
The Cross-Border Mergers Regulations
28
Conclusions
30
11.
Bank Rescues and Financial Stability in the United Kingdom
Collapse of Northern Rock
5
Banking (Special Provisions) Act 2008
9
The Scheme of the Legislation
9
Challenges to the Legislation
16
Other Financial Crisis Events
20
Banking Act 2009
24
Introduction
24
Scope and Content of the Act
26
General Considerations
29
The Stabilization Options
37
Transfer to a Private Sector Purchaser
38
Transfer to a Bridge Bank
40
Temporary Public Ownership
43
Share Transfer Orders
45
Property Transfer Instruments
49
Partial Property Transfers
51
The `No Creditor Worse Off' order
58
Compensation for Transferors
64
Continuing Obligations and Other Matters
67
Bank Insolvency
69
Bank Administration
75
Investment Banks
79
Interbank Payment Systems
81
Emergency Liquidity Assistance
85
The Nature of the Assistance
85
Recent Use of Emergency Liquidity Assistance
91
Legal Aspects of Emergency Liquidity Assistance
93
Other Forms of Assistance of the Financial Markets
95
Conclusions
96
12.
Cross-Border Reorganization and Winding Up of Banks
Scope of the Directive
5
Impact of the Directive on EEA Credit Institutions
10
Reorganization
11
Winding Up
16
Common Provisions
23
Regulatory Issues
26
Third Country Institutions
27
Court Assistance for Foreign Liquidators
30
Cross-Border Insolvency Regulations 2006
31
Section 426 of the Insolvency Act 1986
36
General Powers of the Court
38
Conclusions
40
13.
Deposit Protection Schemes
EU Law and Deposit Protection
5
The Financial Services Compensation Scheme
9
Part 4 of the Banking Act 2009
11
The Landsbanki Freezing Arrangements
13
The Background
13
The Legal Issues---Action taken by Iceland
16
The Legal Issues---Action taken by the United Kingdom
19
The Current Position
22
The Wider Issues
23
Conclusions
24
14.
The Liability of the Regulator
Immunity Provisions and Community Law
5
Immunity Provisions and the European Convention on Human Rights
12
The Effect of an Immunity Provision
20
Regulatory Liability
24
Conclusions
35
C.
THE BANKER-CUSTOMER RELATIONSHIP
15.
The banker-Customer Contract
The Banker and the Customer
2
`Banker'
3
`Customer'
5
The Nature of the Relationship
9
The Terms of the Banker-Customer Contract
17
The Terms of the Contract
20
The Customer's Duties to the Bank
23
Introduction
23
The Drawing of Cheques
25
Duty to Disclose Known Forgery
29
Other Duties
35
Regulation of the Banker-Customer Contract
38
Introduction
38
Unfair Contract Terms Act 1977
39
Unfair Terms in Consumer Contracts Regulations 1999
45
FSA Guidence
50
16.
Cheques
Definitions
6
Bills of Exchange
6
Cheques
9
Impact of the Cheques Act 1992
13
Payment by Cheque
18
Introduction
18
Acceptance of a Cheque
19
Cheque Guarantee Scheme
21
Cheque Clearing
26
17.
Duties of the Paying Bank
The Duty to Pay
4
The General Nature of the Obligation
4
The Bank's Duty in Executing Payment Instructions
5
Termination of the Bank's Authority to Pay
6
Failure to Comply with Payment Instructions
11
Nature and Consequences of Unauthorized Payment
13
Introduction
13
Payment beyond the scope of the Mandate
16
Forged Signatures
20
Misappropriation by an Authorized Signatory
24
The Recovery of Payments Made
33
Statutory Protection of the Paying Bank
40
Payment in Due Course
41
Material Alteration to the Cheque
43
Incomplete Cheques
44
Forged and Unauthorized Indorsements
46
Section 80 of the Bills of Exchange Act 1882
52
Section 1 of the Cheques Act 1957
55
Liability to Third Patties
58
Introduction
58
Conversion
59
Negligence
62
`Dishonest Assistance'
64
18.
Duties of the Collecting Bank
Collection of Cheques
3
Introduction
3
Role and Position of the Collecting Bank
5
The Collection of Cheques
8
Notice of Dishonour
10
Statutory Protections Available to the Collecting bank
11
Liability of the Collecting Bank to third Parties
21
Introduction
21
Conversion
22
Monies Had and Received
25
`Knowing Receipt'
27
Negligence
32
19.
Electronic Funds Transfers
Electronic Funds Transfer Systems
5
Introduction
5
Bacs
8
Chaps
10
Target
12
Legal Nature of EFT
14
Legal Consequences of an EFT payment
20
Agreement of Creditor
21
Authorization of Payee's bank
22
The Nature of the Payment
23
International Payments
24
Libilities to Thrid Parties
26
D.
THE BANK AS SERVICE PROVIDER
20.
The bank as a Lender
Overdraft Facilities
4
Operation
4
Cancellation
5
Demand
6
Interest
8
Term Loans
12
Nature and Operation
12
The Facility/Purpose
16
Conditions Precedent
17
Utilization
18
Currencies
19
Repayment
20
Prepayment
21
Interest
24
Fees/Expenses
28
Tax Gross-up
29
Increased Costs
31
Indemnities
32
Representations
33
Information Undertakings
34
Financial Undertakings
35
General Undertakings
37
Events of Default/Acceleration
38
Payment Mechanics
39
Set-off
41
Assignments and Transfers
43
Governing Law
44
Jurisdiction
46
Conclusions
48
21.
Syndicated Loans
The Arranger
6
Duration and Nature of the Role
6
Functions of the Arranger
8
Liability of the Arranger
11
The Agent
16
Duration and Nature of the Role
16
Functions of the Agent
19
Liability of the Agent---Gross Negligence and Wilful Misconduct
21
Other Sources of Liability and Protections
26
Relationship between Individual Banks and the Borrower
27
Relationship between the Individual Banks
28
Several Obligations
29
Consents, Instructions, and Waivers; Majority Rule
30
Pro Rata Sharing
34
Liability and Regulatory Aspects
40
Security Arrangements
43
The Security Trust Structure
43
Parallel Debt Clauses
48
22.
Trading Loan Assets
Restrictions on Assignments and Transfers
5
Assignment
9
Novation
14
Participation Arrangements
17
Funded Participations
20
Risk Participations
24
Credit Default Swaps
26
23.
Swaps and Derivatives
Interest Rate Swaps
7
Currency Swaps
13
Default and Termination
15
Netting of Multiple Contracts
20
Defences
23
24.
Bank Guarantees, Performance Bonds, and Documentary Credits
Bank Guarntees
4
Performance Bonds
4
Introduction
7
Nature of a Performance Bond
8
Types of Performance Bond
11
Documentary Credits
13
Definition
16
Contracts, the Parties, and their Obligations
19
Types of Commercial Credit
20
Issuing Commercial Credits
21
Application of Autonomy Principle
24
Transfer and Assignment of Credits
26
Documents Presented under a Commercial Credit
30
Introduction
30
Strict Compliance
32
Transport Documents
34
Insurance Documents
36
Commercial Invoices
37
Original Documents
39
Presentation and Examination of Documents
41
Presentation of Documents
41
Examination of Documents
43
Security under a Commercial Credit
49
Pledge of Goods
51
Trust Receipts
55
Standby Credits
56
Introduction
56
Nature of the Standby Credit
58
The Fraud Exception
61
Damages for Failure to Pay under a Credit
69
Private International Law Issues
72
Introduction
72
English Buyer---English Issuing Bank
74
Issuing Bank---Seller
78
Confirming Bank---Seller
82
Issuing Bank---Confirming Bank
84
The Impact of the Applicable Law
86
25.
Sources of Bank Liablity
The Springwell Navigation Case
6
Factual Background
6
Claims in Contract and Tort
7
Contractual Disclaimers
10
Misrepresentation
12
Breach of Fiduciary Duty
13
Conclusions
15
Other Cases
16
Advisory and Management Arrangements
18
Conclusions
21
E.
GUARANTEES AND SECURITY
26.
Guarntees
Purpose, Definition, and Characteristics
2
Purpose
2
Definition
4
Characteristics
6
Formalities
10
Introduction
10
Offer and Acceptance
12
Consideration
14
Intention to Create Legal Relations
16
Requirement of Writing
19
Guarantees and Indemnities
23
Distinction between Guarantees and Indemnities
24
Interpretation and Liability
28
Interpretation
29
The Guaranteed Liabilities
32
Essential Validity
35
Nature of the Guarantor's Liability
37
Unfair Contract Terms
38
Unfair Contract Terms Act 1977
41
Unfair Terms in Consumer Contracts Regulations 1999
44
Capacity to Guarantee
45
Introduction
45
Individuals
46
Companies
49
Other Entities
54
Duties of the Bank to the Guarantor
55
Introduction
55
A Duty to Advise?
57
A Duty of Good Faith?
59
A Duty of Disclosure?
60
A Duty to take Other Security?
63
A Duty of Realization?
66
Discharge of the Guarantor
69
Introduction
69
Discharge by Payment
70
Discharge of the Guarantor
72
Vitiating Factors
74
Preference
76
Transactions at an Undervalue
79
Termination by the Guarantor
81
Introduction
81
Express and Implied Termination Rights
82
Rights of the Guarantor following Payment
84
Rights of the Guarantor
84
Obligations of the Bank
86
Conflict of Law Issues
88
27.
Security---Characterization, Formalities, and Registration
Contractual Nature of Security
2
What is a Security Interest?
4
The Scope and Extent of the Security
8
Formalities
15
Part 25 of the Companies Act 2006
18
Foreign Assets
24
Foreign Companies
33
Summary of Registration Requirements---Foreign Companies
42
28.
Types of Security
Fixed Charges
3
Floating Charges
6
Definition
6
Importance of the Characterization
10
Crystallization
11
Priorities
14
Introduction
14
Categories of Priority Claims
15
Statutory Priorities
16
The Prescribed Part
20
Occupational Pension Schemes
22
Employees
23
Priority as against other Secured Creditors
24
Priority as against Unsecured Creditors
27
Rights of Set-off
28
Lines
28
Execution Creditors
32
Distress for Rent
35
29.
Charges Over shares and Other Securities
Legal Charge
5
Equitable Charge
9
Foreign Shares
12
Charges over Uncertificated Securities
15
Registration Formalities
22
Priorities
25
30.
Charges Over Receivables
Essential Validity
2
Foreign Receivables
6
Registration Formalities
7
Priorities
9
31.
Charges Over Bank Balances
Features of the Security
2
Registration Formalities
3
Priorities
5
32.
Charges Over Real Estate
Nature of the Asset
5
Nature of the Security
11
Extent of the Security
15
Registration of the Security
19
Remedies of the Mortgagee
21
Power of sale
23
Appointment of Receiver
25
Taking Possession
28
Restrictions on the Exercise of the Mortgagee's Powers
30
Consolidation
32
Priorities
37
Grounds of Challenge
39
Security Over foreign land
49
33.
Charges Over Aircraft
UK Aircraft
3
Foreign Aircraft
10
International Issues
13
34.
Charges Over Ships
English Ship Mortgages
3
Priorities
8
Foreign Ship Mortgages
11
Enforcement of Ship Mortgages
13
35.
Financial Colleteral Arrangements
Settlement Finality Directive
4
Structure of the settlement Finality Regulations
6
Private International Law Issues
15
Financial Collateral Regulations
22
36.
Lien and Set-off
Right of Lien
2
Bank's Right of Set-off
5
Other Rights of Set-off
6
37.
Vitiating Factors---`Financial Assistance'
Financial Assistance
2
Scope of the Prohibition
5
`Financial Assistance'
12
`Larger Purpose' Exemption
16
Other Exemptions
20
Consequences of Breach
21
Illustrative Transactions
25
38.
Transactions Between Companies and their Directors
Substantial Property Transactions
3
Transactions involving Directors
6
39.
Avoidance of Security in Insolvency
Transactions at an Undervalue
4
Preferences
6
Extortionate Credit Transactions
7
Avoidance of Floating Charges
9
Transactions Defrauding Creditors
12
F.
SELECTED CROSS-BORDER ISSUES
40.
The Banker-Customer Contract in Private International Law
The Governing Law of the Relationship
6
The Effect of the Applicable Law
11
Capacity and Authority
15
Foreign Nationals/Individuals Resident Abroad
17
Foreign Companies
22
Situs of Deposit Obligations
26
Conclusions
34
41.
Cross-Border Financial Services, Consumer Protection, and Unfair contract Terms
Choice of Law under Rome I
6
Provisions Relating to Consumer Contracts
9
Financial Instruments
14
Multilateral Trading Systems
16
Financial Instruments/Rights Issues/Takeover Offers
22
Financial Instruments
23
Terms and Conditions of Public Share Offers
26
Public Takeover Offers
28
Collective Investment Schemes
31
Foreign Services
32
The Banker-Customer Contract
39
The Impact of Domestic Consumer Protection Laws
43
Unfair Contract Terms Act 1977
47
Unfair Terms in Consumer Contracts Regulations
55
Consumer Credit Act 1974
56
Conclusions
64
42.
The Banker's Duty of Confidentiality
The Applicable Law
6
Nature and Scope of the Duty of Confidentiality
10
Compulsion of Law
16
Introductory Remarks
16
Statutory Obligations of Disclosure
18
Limitations on the `Compulsion of Law' Exception
19
Disclosure Orders made by an English Court in relation to Materials in England
22
Disclosure Orders made by an English Court in relation to Materials held Abroad
26
Disclosure Orders made by a Foreign Court
34
Interests of the Bank
42
Public Interest
47
Consent of Customer
56
Express Consent
58
Implied Consent
60
Liability to the Recipient
62
Damages for Breach
63
Data Protection Act 1998
65
The Wider Duty of Confidence
68
Duties of Confidentiality to Third Parties
73
Other Duties of Confidentiality
77
Conclusions
81
43.
Freezing Injunctions and International Banks
Nature and Effect of a Freezing Injunction
5
Action to be taken by the Bank
13
Necessity for Compliance
14
Steps to be taken
16
The Extent of Compliance
18
Impact on Banker-Customer Relationship
22
Set off
27
Enforcement of Security
27
Relationship between the Bank and the Applicant
31
Obligations of the Bank
32
Obligations of the Applicant
36
Relationship between the Bank and Third Parties
39
Territorial Issues
42
Foreign Branches
44
Assets held Abroad
48
Conclusions
51
44.
Execution Proceedings and Foreign Deposits
Third Party Debt Orders
4
Attitude of the English Courts in Extra-Territorial Cases
9
The Case Law
11
Special Cases
18
Conclusions
19
45.
Liability for Branch Deposits and the Impact of Foreign Law
The General Principles
4
Closure of a Branch
10
Outbreak of War
14
Foreign Customers of UK Banks
15
UK Customers of Foreign Banks
16
Expropriation
18
Other Forms of Seizure
21
Exchange Controls
27
Moratoria
28
Blocking Orders
31
Conclusions
38
46.
Economic Sanctions
The Sources of Sanctions Legislation
6
Effect of Sanctions
10
Conclusions
13
47.
Customer Obligations and Foreign Law
Moratoria
6
Exchange Controls
10
Conclusions
14
G.
ISLAMIC FINANCE
48.
Islamic Finance---Principles and Structures
The Foundations of Islamic Finance
4
Riba
8
Gharar
15
Maisir
19
Unjust Enrichment
20
Rules Governing Islamic Finance Transactions
22
Product Structures---Customer Funding
25
Murabaha
26
Tawarruq
32
Bai' Salam
35
Bai' al `ina
36
Ijara
38
Istisna'a
41
Musharaka
43
Mudaraba
46
Sukuk
49
Attitude to Conventional and Ancillary Structures
51
Product Structures---Deposits
53
Mudaraba
55
Wakala
57
Wadi'a
58
Qard
59
49.
Islamic Finance Transactions in the Courts
English Case Law
3
Islamic Investment Company of the Gulf (Bahamas) Ltd v Symphony Gems NV
4
Beximco Pharmaceuticals Ltd v Shamil Bank of Bahrain EC
8
The Investment DAR Company KSCC v Blom Development Bank SAL
15
English Case Law---Conclusions
19
Malaysian Case Law
21
Earlier Cases
27
Later Cases
32
Malaysian Case Law---Conclusions
36
50.
Corporate and Regulatory Issues
Constitutional Structure of Islamic Banks
3
Overview
3
Constitutional Issues
6
The Shariah Supervisory Board
8
General Regulatory Issues
13
Regulatory Standards and Guidelines
16
Deposit-taking
17
Collective Investment Schemes
20
Islamic Home Finance
26
Other Regulatory Issues
28
Islamic `Windows'
30
51.
Harmonization and the Development of the International Islamic Financial Markets
The Imperatives of Standardization
3
The Tawarruq and the Sukuk---Illustrations of the Difficulties
6
Enforcement Issues
14
What Needs to be Harmonized?
17
Documentation
20
Shariah Rulings
23
The Regulatory Framework
26
Capital Adequacy
30
Taxation
34
Conclusions
37
Index
821