Law firm Arthur Cox at cutting edge of decade of change in the financial market
The financial market today is dramatically different to that of a decade ago when the world was in the midst of the credit crunch and the beginnings of what was to be a lengthy financial crisis.
The 10 years that have passed have certainly been eventful with the property crash resulting in the collapse of several major corporate names in the financial world such as Northern Rock, Lehman Brothers and Anglo Irish Bank. These spawned a huge market in non-performing loans and prompted major changes in how our financial institutions are regulated.
It has been a time of immense change also for the Finance Team at leading law firm Arthur Cox, situated as they are at the very heart of the local market, thereby placing them at the coalface of what was a rapidly evolving situation.
Respected as one of the most experienced teams of financial legal advisors in Ireland, the group is led by Partner Kieran McGarrigle who joined the firm in 2010.
Then, attracted to join Arthur Cox under Managing Partner Alan Taylor, now the firm’s Chairman in Northern Ireland, Kieran saw an opportunity to be “at the cutting edge of legal developments” in the financial sphere.
Kieran said: “There was a real sense at the time that something major was happening at Arthur Cox in terms of the Partner team that was being assembled by Alan Taylor and the incredibly strong list of clients it was accumulating. Alan was driving the firm forward and I wanted to be part of that.”
“Rather than being a local practice involved in some small or relatively insignificant element of a large transaction, Arthur Cox was the lead advisor on major local and international transactions.”
The same is true today as the Finance Team lives up to the reputation of the wider Arthur Cox group, which has become synonymous for its expertise and having a pragmatic and nuanced approach to complex legal matters.
During his eight years at the firm, Kieran has assembled a team that has firmly established Arthur Cox as the go-to practice for advice in the sector.
Recently expanded to include Colm McElroy, who until the beginning of this month served as Associate in the group, the team also includes Stuart Mansfield and Lizanne Jones, who focuses primarily on property finance for the group.
Kieran commented: “Colm’s appointment to the Partner team has significantly strengthened what I believe was already among the leading Finance teams anywhere in Ireland.
“In Stuart, we are fortunate to have one of the most experienced practitioners in the industry with a wealth of experience advising financial institutions and corporations on a global scale on complex financing transactions.
“Lizanne has helped us to build a dedicated property finance offering that is critical in a market where real estate assets are the traditional form of security for a lender.”
It is the sense of global scale, with offices in Dublin, London, New York and Silicon Valley, that ensured Arthur Cox stood apart during the financial crisis.
Kieran, who considers convincing Yvette Cooper, the Treasury Minister at the time, that savers with the Presbyterian Mutual Society should be compensated following its collapse and then structuring a rescue package for those savers that was acceptable of both main political parties in Northern Ireland, as one of his career highlights, recalls the immediate aftermath of the financial crash.
He said: “In those early years, the market really was in crisis resulting in banks effectively closing their doors to new lending into the property market. With property prices falling and limited or no access to liquidity for borrowers, it was only a matter of time before a non-performing loan market in Northern Ireland would balloon.
“We saw Bank of Scotland withdraw from the Irish market with a number of substantial distressed debt disposals. NAMA subsequently sold its Project Eagle portfolio while we also saw Ulster Bank dispose of four substantial distressed debt holdings.
“It was an exceptionally busy time in the local market and Arthur Cox acted on behalf of the sellers and purchasers in many of the most prominent deals, taking the lead in some of the key transactions.”
As the financial sector moves into a period of normalisation, Kieran sees a “new era” of improved liquidity while the Finance team is also advising on some significant regulatory changes that are around the corner as authorities aim to reduce the likelihood of another financial crisis occurring on the same scale.
He said: “The banks’ regulator the Prudential Regulation Authority now requires certain of the larger banks to separate, or ring-fence, certain core banking services critical to individuals and small and medium-sized enterprises from wholesale and investment banking services.
“This is a significant reform which must be implemented by the end of January next year and on which Arthur Cox is assisting a number of the UK’s best-known financial institutions in preparation for the changes.”
An increase in alternative lending meanwhile, and a growing appetite within local banks for new lending across most sectors, including development finance for the property market, is increasing liquidity and potentially staving off what had appeared to be turning into a potential “liquidity crisis”, Kieran added.
“The local banks are noticeably more active and competition for new business is definitely on the rise again with new lending products coming to the market to support property development. We are also seeing strong levels of interest in asset-based lending from alternative lending platforms and even private investors.
“These alternative lenders will make available specific lending products, normally where there is a tangible asset offered as security such as a real estate asset. Private investors are also seeing some asset-based lending projects as providing a better return than a deposit account with a bank.
“This increase in available liquidity is to be welcomed as it should help sustain and drive growth in Northern Ireland.”
Whilst the increased liquidity is a positive development, Kieran remains cautiously optimistic about the future of the financial market in Northern Ireland.
He added: “An increased available liquidity in Northern Ireland needs to be underpinned by a healthy pipeline of transactional activity. At the moment, the political stalemate at Stormont and the constitutional uncertainty with Brexit has cast a shadow over the appetite of some buyers, sellers and investors in Northern Ireland which, in turn, means that the available liquidity is not being utilised to the extent that it could be.
“There are also some sector specific challenges in construction, as a result of the demise of Carillion and the administration of Lagan Construction. Also, in commercial property investment, the attempts by retailers to vary their rental covenant through a Company Voluntary Arrangement is causing some lenders to look closely at existing and new commercial investment lending as the rental covenant is normally the key focus for a lender when funding such an investment.”
As the financial market continues to evolve, Kieran envisages further expansion of the Finance group at Arthur Cox.
“We are always looking for young talented lawyers as we continue to build our team of Associates and Partners.
“There are definitely some challenges ahead for us in Northern Ireland, however we will continue to remain at the forefront of any developments as we service clients across all sectors.”
As one of the foremost law practices in Northern Ireland, Arthur Cox employs more than 90 people at its Belfast office for which it provides a full-service offering meeting the requirements of its international client base.
In addition to the Finance team, the firm provides legal advice in corporate and commercial, employment, litigation and dispute resolution, energy and property.
- The Finance Team at Arthur Cox is well positioned to advise businesses on the impact of emerging trends in the sector and on any aspect of banking and finance law in Northern Ireland. Call +44 28 9023 0007 for further information from Kieran, or your regular Arthur Cox contact.