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08 April 2021 6 min read

Critical legal entity restructuring for a global financial institution

                           

Simplification of the firm’s existing legal entity structure and set up of a new resolution entity to ensure critical business activity would continue, resulting in an orderly wind-down

Our client is a global financial services firm and a market leader in securities, investment management and credit services, based in the US. As part of its 2019 Resolution Plan submission, the organisation needed to demonstrate to US authorities that it had a strategy to address certain shortcomings that had been identified in previous plans.

 

Client Requirements

Above all, our client had to overcome complexities within its existing global legal entity, as well as set up a new resolution funding entity. To tackle this, it needed a small team of experienced project managers and subject matter experts (SMEs) to assist with:

  • Establishing an Intermediate Holding Company (IHC) - the new funding entity to prevent misallocation of financial resources to legal entities.
  • Several Legal Entity Restructurings (LERs) across the firm – including entity openings, closings and mergers.

This restructuring programme was an integral part of a drive to ensure that critical functions and business activities could continue as needed in a resolution scenario, resulting in an orderly wind-down.

 

Baringa's Role

The Baringa team played a pivotal programme management role that spanned multiple partners, businesses and regions. It involved 70 legal entities in 20 different countries, including collaboration with treasury, finance, operations, legal and compliance stakeholders.

Our focus was on actively managing execution teams and anticipating risks and issues as early as possible. Our expertise was enhanced by a strong understanding of the financial, operational, regulatory and legal considerations that affected the restructuring journey.

The programme resulted in all parties involved to be ‘singing from the same song sheet’, including in the remediation documentation section of the Resolution Plan.

 

Outcomes and Impact

Baringa successfully delivered the LERs and operationalised the funding IHC ahead of the Resolution Plan submission. This was achieved while securing business benefits, with no disruption to the organisation’s operations.

We played a critical role in the client’s relationship with the US agencies and other regulators, thanks to ongoing communications and the submission of core components of their strategy.

Cindra Maharaj, Baringa, Financial Services, Director: “Baringa Partners is delighted to have supported a global financial institution with their legal entity restructuring efforts. We leveraged a small, senior level team of multi-disciplinary subject matter experts to support and advise on the design and execution of a new funding IHC for the firm, closing of material service entities to eliminate split ownership chains and merging material entities with similar activities.”