News mean that there will be less work for lawyers . Navarro says : “ While there may be less potential clients , the needs of the new consolidated banks operating on a global scale will still require expert , comprehensive advice .” However , Núñez-Lagos argues that , while consolidation is expected to boost Spanish law firms in the immediate future , once the process is complete , there will be less legal work available . “ The numbers of banking entities back then [ in 2009-2010 ] were about fifty – now we have half a dozen ,” he says . “ The banks are now bigger , they are more sophisticated and more experienced . I suspect therefore there will be less work afterwards as they ’ ll be more capable of doing it in house – banks will be looking for more value-added work from external lawyers rather than the bread-and-butter-type work .”
It is also inevitable that there will be further consolidation in the Portuguese banking sector , lawyers say . “ Although there are a small number of banks , the fact that they are all facing capital constraints will definitely mean further consolidation ,” says Hugo Rosa Ferreira , partner at PLMJ . “ The word is that one or two of the banks – large and small – are facing more pressure , but it ’ s difficult to say which one will lead the process and how the combination will work ,” he adds . “ I think we ’ re going to see more than one type of consolidation .”
Alexandra Valente , partner at SRS Advogados in Lisbon , says capital shortages will drive merger activity in the Portuguese banking sector . “ There is a huge need for capital because of the low profitability of the banking business ,” she says . “ Interest rates alone and regulatory demands require new capital and [ will drive ] consolidation involving both big and small banks – the smaller banks for the obvious reasons that they are facing competition and need to strengthen their capacity ,” she says . Rosa Ferreira says outside investors might be a more likely solution for struggling banks than mergers . With regard to mergers , he observes that , even if a deal is agreed , “ if you add a bank that needs capital to another one , you ’ re not going to end up with a bank that doesn ’ t need capital , unless there is a third party coming in ”.
Lawyers anticipate that there will be interest in Portuguese banks on the part of Chinese and Spanish investors . It is expected that such an environment will generate work for lawyers in the area of M & A , banking and restructuring , according to Valente , who anticipates possible interest in smaller Portuguese banks from international private equity houses . However , Valente adds that , in the long run , banking consolidation will probably mean less law firms are involved . But Rosa Ferreira predicts that even if there ends up being fewer Portuguese banks in the long-term , with a lot of them working with more than one law firm already , “ consolidation won ’ t mean less work ”.
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