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In-house: Lloyds appoints real estate finance sub-panel ahead of summer global review

Lloyds Banking Group has appointed a specialist sub-panel for commercial mortgage-backed securities (CMBS) work ahead of its global panel review this summer, with US and Magic Circle firms among those taking places.

The real estate sub-panel took effect in January following a review, with core firms winning places including US firms K&L Gates and Paul Hastings, as well as Clifford Chance, Allen & Overy (A&O), Ashurst, and Berwin Leighton Paisner.

The in-house team chose the firms based on experience in loans and capital markets work. A Lloyds lawyer told Legal Business: ‘Rather than using firm A to do the loans work and then have a separate firm to do the bond work later, you have one firm that understands it completely from day one and can give you the technology and insight to make that process cheaper, economical, and more efficient overall.’

The bank is known to work with firms including CMS Cameron McKenna, Dentons, Osborne Clarke, Taylor Wessing and Charles Russell Speechly for more commoditised real estate work.

Commercial mortgage-backed securities have seen a revival in recent years, as economic growth coupled with rising commercial property prices generated investor confidence in the market. The CMBS market in particular showed promising levels of activity last year with European issuance as of September 2015 at €2.8bn and up on 2014 volumes, according to data from Thomson Reuters. Analysts predict European CMBS issuance for 2016 to be between €5bn and €10bn.

With an annual legal and regulatory spend of about £400m, The bank’s group general counsel Kate Cheetham is also gearing up for a review of its general legal panel this summer, and firms are expected to be notified by October. Those currently part of its ten-strong panel include A&O, Linklaters, Herbert Smith Freehills, DLA Piper, Ashurst, Addleshaw Goddard, Eversheds, Hogan Lovells, CMS and Norton Rose Fulbright.

Lloyds recently requested all of its core panel firms to pitch for advisory work relating to separating its retail and investment banking operations ahead of the UK’s newly established ring-fencing rules.

Previous sub-panels created by the bank include its customer-pay panel with key spots allocated to firms including Hogan Lovells, CMS, Addleshaw Goddard and Osborne Clarke in 2014.

Yesterday (26 February) the UK bank announced its annual accounts for the 2015 financial year, posting an underlying profit rise of 5%, with provisions for legal actions and regulatory matters coming in at £813m, an increase from £521m the previous year.

For more banking analysis, see ‘Like Scotland leaving the UK’: Bank ring-fencing reforms herald big changes’