Banking and finance law involves a variety of specialized areas of law, but all deal with the lending of money or the management of financial liabilities. Banking and finance law involves the documenting of the contractual relationship between lenders and borrowers and ensuring that all of the terms agreed to by the parties are reflected in the terms of loan agreements and enforceable. Banking and finance law is a technical, evolving, and jargon-heavy area of law.
The Practice Area of Banking and Finance Law includes:
- Standard bank lending: a bank lends money to a borrower on documented repayment terms.
- Acquisition financing: a loan is made to a corporate borrower or private equity sponsor for the purpose of acquiring another company. This includes leveraged finance, where the borrower uses a very large amount of borrowed money to meet the cost of a significant acquisition without over committing its own capital.
- Real estate financing: a loan is made to enable a borrower to acquire a real property interest or finance the development of land. Such transactions are usually secured with a mortgage on the acquired property interest.
- Project financing/Bridge Loans: the financing of long-term infrastructure and construction where the amounts borrowed to complete the project are paid back with the cash flow generated by the project. A bridge loan closes the gap between the start of construction and the generation of cash flow sufficient to support the long term financing.
- Asset financing: similar to real estate financing but for the purpose of acquiring property other than real property, such as inventory and equipment. The lender normally takes security over the assets in question.
- Financial services regulation: ensuring that bank and finance companies operate in compliance with the relevant financial regulations.