Banking & finance annual report
New financial technology means Spanish regulators will
adopt ‘sandbox’ approach
Regulators acknowledging that they need to develop a new strategy in order to facilitate the
development of the fintech industry
Javier Menchén
It is anticipated that Spanish regulators
will soon adopt a regulatory `sandbox’
approach, in order to keep up with the
growth of financial technology, says
Javier Menchén, partner at Ramón
y Cajal Abogados in Madrid. Such
a scenario would involve regulators
testing regulations on a small number
of financial institutions to see if they
are workable.
“We are currently working with
a lot of Spanish and international
banks in order to help them legally
adapt their banking procedures to
new fintech scenarios,” says Menchén.
“However, as lawyers, we can see that
regulation is falling behind reality
as things move so fast – sometimes,
we have to say to a technical team
that we will have to talk to regulators
about some of the developments they
are proposing, as while it may look
reasonable, there is no case law, no
precedent.”
Already an established approach in
other countries, a regulatory sandbox
is a safe way for banks or financial
institutions to build and test in a live
environment how new products, services
and delivery mechanisms, not yet
included in the law, work in the market,
according to Menchén. “Regulators are
acknowledging that in order to let the
fintech economy progress, we cannot
view regulation like we did in the past,
or else we would be having to change
EU and local laws every day, which in
itself is a slow process,” he explains.
“A sandbox scenario enables banks to
find out from a relatively small number
of users if a new procedure works
technically and from a compliance
perspective – it’s an innovative way to
do things.”
Menchén says that if Spanish
regulators do decide to adopt the
sandbox approach in the future, it will be
an atypical process. “We won’t be sitting
at our desks doing a report on the law,
we will be collaborating with companies
and even the regulators to see how this
sandbox scenario will work.”
Novo Banco sale completes stabilisation of
Portuguese banking sector
Paula Gomes Freire
The recent sale of Novo Banco to US
private equity fund Lone Star marked a
watershed moment for Portugal’s banking
industry. It followed a difficult period
after the financial crisis, which included
the 2014 collapse of Banco Espírito
Santo, from which Novo Banco would
ultimately emerge as the ‘good bank’.
A year later Banco Banif also collapsed,
which resulted in its ‘good assets’ being
taken over by the Spanish banking
giant, Banco Santander. Earlier this year,
another major Portuguese bank, BPI,
was taken over by Spain’s Caixa Bank.
Novo Banco was effectively the last major
banking sector asset to be sold.
“With the sale of Novo Banco, the
government is very excited, because it’s
now possible to say that the banking
sector has stabilised and all the major files
are now closed,” says Paula Gomes Freire,
partner at VdA Vieira de Almeida, which
advised the Bank of Portugal on the Novo
Banco deal. “It’s been a very interesting
34 • IBERIAN LAWYER • March / April 2017
period to be a banking lawyer in Portugal
– clearly the banks are moving from
having a big balance sheet to really
focusing on their core business.”
What happens next for Portugal’s
banking lawyers? There is still the
problem of Portugal’s non-performing
loans and this should generate plenty
more work. Nevertheless, lawyers must
still readjust to a new banking landscape
in which most of the domestic banks
are foreign-owned. In addition, the
marketplace is also being impacted by
the growing fintech industry, which
brings both challenges and opportunities.
“New technology and how it
affects the banking business will raise
questions as to what type of legal
advice will be required from lawyers,”
says Gomes Freire. “We have worked
together with people who specialise
in banking and IT to monitor what is
happening, so we are well positioned to
advise on these totally new areas.”
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