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13 January 2020

cee overview - banking, finance & capital markets

Balancing opportunities and challenges together

The CEE/SEE banking & finance market was quite busy in 2019 and we expect continued strength in 2020, with several areas standing out.

Our banking & finance and capital markets practice has kept on growing across the CEE/SEE region and we are deeply grateful to our clients for the opportunities they have offered us and to our teams for their efforts in pursuing projects to successful closing.

Bank/FIG consolidation activity looks set to continue at an accelerated pace, as several projects started in the region in 2019 or are expected to launch in 2020, including in Austria, Hungary, Poland, Romania, Serbia, Slovakia and Slovenia. Most deals refer to banks and payment services platforms, but insurance, finance leasing and debt/asset management targets also seem to be coming to market. As NPL ratios have dropped significantly and investor focus has shifted to Italy and Greece (where NPL stocks still appear to be high), we believe a few NPL portfolio transactions are still in the pipeline across CEE/SEE for 2020, especially in Croatia, Hungary, Slovenia and Serbia, while Romanian deals depend on changes to the fiscal regime being reversed.

Distressed assets and restructuring projects became more complex (if not more frequent) in 2019 and we believe both complexity and numbers/volumes will grow in 2020. This trend will be driven by recent or anticipated legislative changes both on the EU (e.g. Restructuring Directive) and national levels (e.g. changes to insolvency legislation introduced last year in Bulgaria and those awaited in Hungary) and looming market adjustments. Overall debt restructuring work, including direct lending from PE/VC funds and other alternative lenders, kept us busy in 2019 and we see room for more growth in this area in 2020, especially in the construction, automotive and transport industries.

Regulatory work also continued to grow in volume and diversify in substance, which we expect will also be the case in 2020. The main drivers include changes in EU legislation (e.g. concerning personal data protection, net security, payment services, common EU rules on securitisation, the new Prospectus Regulation, the Shareholder Rights Directive II and the Benchmark Regulation), but also major internal reorganisation projects launched by strategic players pursuing digitalisation and increased efficiency across the FIG sector. Consumer lending and related regulatory and litigation work (in particular as regards CHF loans, ECJ case law developments and investor protection arbitration/litigation) also picked up last year and looks set to continue in 2020. Brexit related advice, focusing mostly on contingency planning, was a constant in 2019 and, as our roadmap20 goes to print, we are looking forward to discovering how the Brexit situation will develop in January 2020 and thereafter.
In strong correlation with the regulatory developments, FinTech start-ups and ever more complicated IT projects for the FIG industry gained importance in the overall work-mix throughout the region. Be it development/change and implementation of new operating systems or the introduction of new platforms/apps, our IT contracts specialised lawyers, together with the data protection & start-ups teams, which started growing at an accelerated pace a few years ago, now have a strong practice in the FIG market in CEE/SEE, and we anticipate sustained growth in this area in 2020.
Equally, lending remained a busy area for us last year. We saw both bank and direct/PE lending, with an increasing number of cross-border transactions, as well as local mandates across various industries, and we anticipate this trend will continue in 2020.

Looking forward to 2020, it is clear that the market, as well as our practice will face opportunities as well as challenges. In both respects we firmly believe that close cooperation, i.e. working together across practice areas and across jurisdictions, is more important than ever. Delivering efficient services that are based on innovative tools and legal tech solutions is our best bet to making opportunities prevail over challenges. As readers will discover from roadmap20, we are successfully applying legal tech solutions in a variety of areas, including project management, which has significantly improved efficiencies for clients and the overall work environment/experience for our teams.

As such, I am quite optimistic that together we will welcome both opportunities and challenges in 2020, efficiently servicing clients and keeping our teams happy for yet another successful year.