Finance Monthly - November 2010

Welcome to the monthly finance bulletin from our banking and corporate recovery department. We were delighted to be placed highly in the most recent Chambers and Partners directory, in particular amongst the top tier of law firms advising sponsors on banking transactions. This bulletin provides an overview of some recent market developments and trends in the finance sector. This issue also features a spotlight on readiness for refinancing. Please get in touch if it raises any issues that you would like to discuss. Jeremy Walsh, Head of Banking Department

G20 endorses Basel III and draft legislation expected March 2011

On 12 November 2010, the G20 leaders endorsed the Basel III agreement. On the same day, the European Commission stated its intention to publish the draft legislation applying Basel III, by amendments to the Capital Requirements Directive, in March 2011.

CBI/ACCA survey highlights the range of financing options being utilised by small businesses during the credit crunch

A report jointly published on 29 October 2010 by the Confederation of British Industry and the Association of Chartered Certified Accountants has analysed the various financing options being used by UK small and mediumsized firms ("SME's"). Their findings show that, although bank overdrafts are still the most common form of funding for SME's, there is general concern in the market about the availability of bank facilities which is making many SME's resort to alternative sources of funding. These alternative sources include extending credit from suppliers, late payment and borrowing from owners, directors, families and friends.

The report concludes that, despite apparent scepticism as to the availability of credit in financial markets, bank overdrafts are still the most popular form of finance. However, financial staff and advisers need to be better-placed to offer advice to SME's advice as to the implications of offering or accepting trade credit arrangements, and more needs to be done to educate SME's as to the benefits of effective credit risk profiling.

FMLC and CLLS respond to the consultation on the implementation of EU Directive 2009/44/EC on settlement finality and financial collateral arrangements (the "Directive")

The Financial Markets Law Committee and the City of London Law Society have now responded to a consultation on the Directive, which is likely to result in the amendment of the Financial Collateral Arrangements (No.2) Regulations 2003 (the...