Finance Update March 2009 - Olswang

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General Finance Law Commission At the end of 2008, the Law Commission published its final report on reforming the law on bribery and corruption. At present there are several overlapping, but distinct, corruption offences under a variety of statutes dating from the 19th Century onwards, as well as an older common law offence of bribery. The Commission proposes that the existing offences be replaced by two general offences of bribery: one concerned with giving bribes, the other with taking them. Two new specific offences are also proposed: an offence of bribing a foreign public official and a corporate offence of negligently failing to prevent bribery by an employee or agent. The Commission also recommends that the law of bribery be extended to cover foreign nationals who reside in the UK and conduct their business here. The same set of provisions would cover both the private and public sectors. (Click here for the report and a six-page summary of the proposed offences.) Loan Market Association (LMA) On 29 September the LMA published an amended version of the leveraged facilities agreement containing The LMA Intercreditor Agreement has been released and is now available on the LMA website, along with a Users' Guide. The LMA Intercreditor Agreement is designed for use with the LMA Leveraged Facility Agreement. In addition, it aims to deal with derivatives in complex transactions, such as those where multiple hedge counterparties are involved. The LMA have also posted on their website the following documents: • LMA Mandate Letter - Joint Arrangers – Underwritten; • LMA Mandate Letter - Joint Arrangers - Best Efforts; • LMA Syndicate Member Commitment Letter For Primary Syndication - for final commitment with approval of documentation; • LMA Syndicate Member Commitment Letter For Primary Syndication - for initial commitment without approval of documentation; • LMA Confidentiality and Front Running Letter of Undertaking; • LMA Front Running Letter of Undertaking; • LMA Front Running Letter of Undertaking Users' Guide; • Syndication Closing Timeline; • Syndication Decision Chart - Unsuccessful Syndication; Olswang © 2008 | www.olswang.com 3
General Finance • Syndication Decision Chart - Successful Syndication; and • Explanatory Memo Relating to Mandate Letters, Commitment Letters, Front Running Letters, Syndication Closing Timeline and Syndication Decision Charts. Payment Services Regulations 2009 The Payment Services Regulations were published on 13 February 2009 in order to implement a European Directive (DIR 2007/64/EC). These regulations, amongst other things, establish an authorisation regime for providers of payment services and set out the activities which authorised payment institutions are allowed to engage in. It came into partial effect on 2 March, with further provisions coming into effect on 1 May 2009 and full implementation occurring on 1 November 2009. Interest Rates On 5 February, the Bank of England Monetary Policy Committee announced a further interest rate cut of 0.5% to 1.0% (this was agreed by 8 members of the committee, with the one dissenting voter voting for a 1% rate cut). On 5 March the Bank of England announced a further reduction of 0.5% to 0.5%, along with a programme of asset purchases of £75 billion financed by the issuance of central bank reserves (see here for more information on how the asset purchase programme will work). On 5 March, the European Central Bank cut interest rates by 0.5% to 1.5% across the euro-zone. This is reduction of 2.75% since 8 October 2008. World Markets The National Institute of Economic and Social Research predicted that consumer spending is set to fall by 3.8% this year, double the largest previous drop of 1.6% in 1991. It also predicted that the UK economy is likely to shrink by 2.5% this year and that any recovery is not expected until the end of the year at the earliest. According to the CBI, 59% of companies surveyed expect access to credit to deteriorate over the course of the next three months and retailers are finding it harder to get trade credit insurance to insure against business partners going bust. The CBI has also predicted that unemployment in the UK will reach 2.9 million by the end of this year. Over the weekend of the 14/15 February the Finance Ministers and Central Bank Governors of the G7 countries met in Rome to discuss measures to stabilise the global economy. They acknowledged that the downturn is likely to persist through most of 2009, that more capital would be needed to restart global credit markets and that it is important for countries to avoid protectionist measures. During the course of February the former bosses of RBS and HBoS apologised for their banks' failures. However, there has been an on-going debate over payment of discretionary bonuses to bankers at certain banks, including RBS. On 13 February the newly formed Lloyds Banking Group announced expected losses of £10billion at HBoS's mortgage unit. Following this, at the start of March, the government Olswang © 2008 | www.olswang.com 4
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Finance Update March 2009 - Olswang

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