Banking – Top 5 Issues

  1. General risks to Irish retail banks posed by Brexit – The Central Bank of Ireland has required some Irish banks to prepare contingency plans relating to Brexit. General threats identified by the Central Bank of Ireland include the significant loan/property-related exposure of Irish retail banks to the UK, risks associated with Brexit having a large negative impact on the UK economy and the risk of Brexit occurring in a disorderly manner if the UK fails to reach a negotiated settlement on post-Brexit arrangements with the EU.
  2. Governing law and jurisdiction clauses and interpretation of agreements – In some sectors, such as shipping and aviation, English law has traditionally been chosen as the universally convenient and understood governing law for the industry. More generally, to the extent that London retains its status as leading financial services centre and transactions continue to be led from London, it seems likely that English law will continue to be chosen as governing law and England will be selected in jurisdiction clauses. Questions will arise as to the interpretation of existing loan documentation to the extent that it refers to legislation, definitions or concepts based on EU law although this risk may be addressed in the period between the Brexit vote and the UK leaving the EU.
  3. Risk of triggering an illegality clause - Although it is unlikely that Brexit in itself would trigger such clauses, certain knock-on effects of Brexit (e.g. the loss of authorisation of lenders through loss of passporting rights) could in theory represent an "illegality" termination event.
  4. Risk of Brexit triggering a material adverse change clause - Some commentators have queried whether Brexit could be invoked as a "material adverse change" event of default. It is generally thought that it could not, but it will depend on the circumstances of the case and the wording of the agreement in question. Parties entering into agreements should bear in mind that considerable financial instability could be experienced after the Brexit vote and they may wish to include contractual provisions to deal with the risk of a disorderly Brexit. 
  5. Risks relating to enforcement and insolvency – The EU Insolvency Regulation harmonises insolvency regimes across the EU (except Denmark) and facilitates cross-border insolvencies. If this no longer applied to the UK, banks taking enforcement/insolvency proceedings in the UK could be open to the risk of competing insolvency proceedings being commenced in other jurisdictions and of not being able to rely on the primacy of the UK proceedings. 


Rachel StantonRachel Stanton

D: +353 1 639 5174





Elaine HanlyElaine Hanly

D: +353 1 639 5160