Mr James Linforth
Partner

James is Stephenson Harwood’s global head of banking and finance. He is also a leading real estate finance lawyer, with over 25 years of experience acting for lenders and borrowers on all kinds of real estate development and investment financings.

He has led on some of the highest profile central London real estate financings in recent years. These include acting for the borrowers in relation to the financings of Paddington Square, Bankside Yards SE1, the Langham Estate and Raffles at the Old War Office. On the lender side, James regularly acts as a trusted advisor to Wells Fargo, OCBC, Bayern LB and HSBC in relation to significant acquisition, development and refinancing transactions.

Ms Charlotte Drake
Partner

Charlotte is a senior finance and corporate trusts lawyer with 20 years’ experience gained in private practice and in-house roles.

As part of her corporate trusts and bond restructuring work, Charlotte has advised trustees on a number of high-profile restructurings and reorganisations including Railtrack, Marconi, British Energy, TH Global, the merger of Whistlejacket and White Pine (two SIVs), the Battersea Power Station restructuring and the £1 billion restructuring of Fairhold Securitisation Limited’s notes and swaps liabilities.

Charlotte also has considerable experience of advising banks and borrowers on high profile, high value, real estate finance transactions.

Alongside her corporate trust work, as knowledge partner for Stephenson Harwood’s Finance Group Charlotte now also supports the partners and fee earners in the debt finance team by working on and promoting knowledge-based projects to help ensure the team’s fee earners provide top quality advice to their clients in an efficient manner.

Ms Helen Larnder
Senior knowledge lawyer

Helen is a Senior Knowledge Lawyer in Stephenson Harwood’s Finance Group. Helen is an experienced finance lawyer, with extensive experience gained in-house and in private practice. Helen has a particular specialism in real estate finance.

Prior to joining Stephenson Harwood, Helen was in-house counsel to the real estate lending team at Investec Bank plc. During her 8 years at Investec, Helen gained extensive experience of advising on complex investment and development lending transactions across a broad range of real estate asset classes.

Helen’s private practice experience involved advising lenders and borrowers on a range of secured lending transactions, including real estate finance and general corporate lending. She now brings her knowledge and experience to a senior knowledge role for Stephenson Harwood’s Finance Group, where her focus is on strategic knowledge projects as well as advising on legal developments impacting both clients and wider legal practice.

Navigating the Future of International Banking: Key Legal and Financial Developments in 2025

This article was written on the basis of the law as at 28 February 2025

The drive for transparency

In recent years, there has been a significant effort by the UK government to tackle economic and corporate crime. Transparency measures have included a register of persons with significant control over companies and more recently, a register of overseas entities (which requires an overseas entity owning a freehold property or a lease over seven years in the UK to register at Companies House and disclose beneficial owners). Now, in what has been described by Companies House as “the biggest shakeup to the service in its 180-year history”¹Robust new laws to fight corruption, money laundering and fraud – GOV.UK, the next effort to tackle economic crime has come into effect, via the Economic Crime and Corporate Transparency Act 2023 (“ECCTA”). ECCTA introduces fundamental reforms to the role of Companies House, designed to make it a more active gatekeeper which protects the integrity of the register. ECCTA grants more wide-ranging powers to Companies House, including the power to reject documents, to query information and to remove information from the register. ECCTA has also toughened the offence regime for delivering documents or statements to Companies House which are false, misleading or deceptive ‘in any material particular’. It is now an offence to deliver such information or statements “without reasonable excuse”, rather than the previous “knowingly or recklessly”. There is a new aggravated offence for knowingly delivering such information or statements.

ECCTA is being implemented over time via secondary legislation. 2025 and 2026 will see further changes which will significantly impact Companies House requirements for UK corporate borrowers, as well as the way security is registered on behalf of lenders. By the autumn of 2025, it is expected that new directors and persons with significant control of UK companies will need to verify their identities with Companies House, either directly or via an “Authorised Corporate Service Provider” (“ACSP”) (there will be a transitional period for existing directors and persons with significant control of an affected entity to comply). On the current timeline, by spring 2026 third parties making filings at Companies House will need to be ACSPs, registered in the UK and subject to the UK’s anti-money laundering regime. Consequently, law firms will likely need to register as an ACSP to continue to provide current services to clients. Similar requirements will be introduced for limited liability partnerships in due course. Limited partnerships will also eventually be impacted, with measures to be introduced including verification of the identity of general partners and the filing of confirmation statements, among others.

ECCTA will also introduce a new offence of failure to prevent fraud, which will create criminal liability for large organisations²Defined as those who meet two of the following criteria: a turnover greater than £36 million, assets greater than £18 million or more than 250 employees. whose employees or agents commit fraud for the benefit of the organisation, unless it can show it had reasonable procedures in place to prevent fraud.

All UK financial institutions, corporate borrowers and finance lawyers should be reviewing their processes to ensure they are ready to comply with the requirements of ECCTA, as the UK continues to overhaul its corporate legal framework.

Jurisdiction clauses in cross border transactions

When the UK exited the European Union, it lost the benefit of the EU regimes relating to the recognition and enforcement of judgments.

The Hague Convention on Choice of Court Agreements 2005 (the “Hague 2005”), to which the UK is a signatory (together with the EU member states, Montenegro, Mexico and Singapore), offered a partial solution because it provides for recognition and enforcement of exclusive jurisdiction clauses. However, lender parties to English law finance documents often prefer “asymmetric jurisdiction clauses” to exclusive jurisdiction clauses – particularly where a transaction is cross-border in nature. Under an asymmetric jurisdiction clause one party (typically the borrower) submits to the exclusive jurisdiction of one court, whilst the other (typically a financial institution) has a choice of jurisdictions in which to bring proceedings. Asymmetric jurisdiction clauses are currently not recognised as being exclusive jurisdiction clauses for the purposes of Hague 2005 by all signatory states. This means lenders have to carefully consider jurisdiction clauses in the context of each transaction.

However, better news for lenders is around the corner. The Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (“Hague 2019”) enters into force in the UK on 1 July 2025. Contracting states (including the EU member states (other than Denmark), Ukraine and Uruguay) are bound to recognise and enforce judgments from other contracting states. Importantly for lenders, asymmetric jurisdiction clauses will be recognised under Hague 2019, providing important flexibility and reassurance to lenders. There remains some uncertainty as to whether certain jurisdictions could still object to asymmetric jurisdiction clauses on public policy grounds, which has long been an issue with these types of jurisdiction clause. Nonetheless, this is a welcome development for financial institutions undertaking cross-border transactions.

Digital Assets – recent developments

Digital assets (for example, crypto-currencies, non-fungible tokens and digital carbon credits) are becoming increasingly important within modern society and their volumes are only increasing.

Traditionally, English law has recognised two distinct categories of personal property – things in possession and things in action. A thing in possession is, broadly, an object which the law would view as capable of possession and would include assets which are tangible, moveable and visible. However, a thing in action includes personal property which can only be claimed or enforced through legal proceedings or legal action, enforceable against a particular party. For example, a debt, rights to sue for breach of a contract or shares in a company.

Digital assets do not always fit neatly into either category of property. Nonetheless, the English courts have, in recent years, concluded on several occasions that cryptocurrency does constitute property under English law.³For example, in 2024, in d’Aloia v. Persons Unknown and others [2019] EWHC 3556, the English High court concluded that the cryptocurrency Tether constituted property under English law.

Recognising the significance of (and potential opportunities offered by) digital assets, back in 2020 the Ministry of Justice asked the Law Commission to review English law on digital assets to consider whether the law required reform to accommodate these assets. In 2023, the Law Commission published its report on digital assets. It concluded that, while certain digital assets are not easy to place within the categories of personal property that have been recognised traditionally under English law, this does not prevent them from being capable of attracting personal property rights. However, they are better regarded as belonging to a separate category of personal property. Therefore, one of the Law Commission’s recommendations for reform was statutory confirmation that a thing will not be deprived of legal status as an object of personal property rights merely by reason of the fact that it is neither a thing in action nor a thing in possession.

The Law Commission published a draft bill (the Property (Digital Assets etc) Bill) in July 2024. At the time of writing, the Bill is still going through the parliamentary scrutiny process and it remains unclear if it will pass in its current form. The Property (Digital Assets etc) Bill is very brief, with the key operative provision stating:

Objects of personal property rights: A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither — (a) a thing in possession, nor (b) a thing in action.

If the Bill is enacted (and we understand there are critics of the Bill), it is hoped it will provide “clarity and greater legal certainty” regarding the treatment of digital assets. Consequently, it should help to give lenders confidence about the nature of digital assets (and, therefore, how to take security over them). This could then, in time, pave the way towards digital assets being more readily accepted by lenders as collateral for loans.

However, it is still important to recognise that, if enacted, legislation of this breadth and brevity cannot hope to solve all the legal questions and issues surrounding digital assets. These questions will still need to be resolved by the English courts.

There remain, too, commercial and practical challenges when taking digital assets as collateral. For example, how can a lender confidently value an asset whose value fluctuates so much? In a default scenario, does a lender understand how to enforce its security over a digital asset? How will lenders need to change their AML, KYC and due diligence processes to cater for these assets?

The Property (Digital Assets, etc) Bill will, if enacted, undoubtedly be a significant step. However, this is in many ways the start of a journey. Consequently, it seems unlikely to us that 2025 will be the year we start to see significant numbers of mainstream lenders starting to accept digital assets as collateral.

Sustainable finance

Green loans (in which loan proceeds finance a specific project which satisfies “green” criteria), social loans (in which loan proceeds finance social projects) and sustainability-linked loans (in which there are in-built financial incentives for achieving sustainability targets) have been a feature of the UK lending market for some years now. However, global volumes of sustainability-linked loans have reportedly declined since 2022. For borrowers, pricing benefits have become less attractive in a higher interest rate environment. Lenders have been wary of a lack of prescriptive framework for such loans – posing risks of reputational harm. All market participants have been particularly wary of accusations of “greenwashing”⁴“Greenwashing” misleads the public (including investors and consumers) into believing that a business is doing more to protect the climate or environment, or causing less harm, than it is..

The wider regulatory picture has also changed – the Financial Conduct Authority (“FCA”) expressed concerns over sustainability-linked lending in 2023⁵https://www.fca.org.uk/news/news-stories/fca-outlines-concerns-about-sustainability-linked-loans-market. The FCA’s sustainability disclosure and labelling regime, including anti – greenwashing rules, came into effect in 2024. The UK Government is also expected to create Sustainability Reporting Standards by endorsing the International Sustainability Standards Board’s sustainability disclosure standard this year (although the European Commission has announced it will look at a proposed “omnibus” agreement, aimed at simplifying the current sustainability reporting framework in the EU).

Various market bodies have worked to promote the adoption of sustainable lending, with the Loan Market Association (“LMA”), Asia Pacific Loan Market Association and the Loan Syndications and Trading Association jointly publishing Green Loan Principles, Social Loan Principles and Sustainability Linked-Loan Principles (and related guidance). These were significantly revised⁶https://www.lsta.org/content/sustainability-linked-loan-principles-sllp/ in 2023 to address certain market concerns, demonstrating the ongoing development of this market. The LMA has also produced draft sustainability-linked loan provisions for insertion into loan agreements, as well as more recently similarly drafted provisions for green loans (published in November 2024). These are welcome developments to help establish a more standardised approach to this type of lending, although it is a fast-evolving market and such provisions will be kept constantly under review.

There is also an increased interest in transition finance in the UK. An independent Transition Finance Market Review (“TFMR”) was published in October 2024 with the aim of supporting an ambition for the UK to become a ‘global hub’ for transition finance. Noting that a lack of agreed definition is a barrier, the TFMR concluded transition finance “in the broadest sense, incorporates the financial flows, products and services that facilitate an economy-wide transition to net zero consistent with the Paris Agreement”⁷Page 6, https://www.theglobalcity.uk/PositiveWebsite/media/Research-reports/Scaling-Transition-Finance-Report.pdf. The TFMR highlights the ongoing role of sustainable finance, noting that (whilst acknowledging challenges) sustainability-linked products could be a “useful part of the transition finance toolkit”. One of the issues identified in the TFMR related to regulatory barriers to transition (including capital treatment) and the FCA has subsequently confirmed it is considering how to embed the TFMR findings⁸https://www.fca.org.uk/news/news-stories/fca-responds-market-review-delivering-finance-global-decarbonisation-and-uk-growth. The LMA has established a taskforce for transition finance, aiming to develop principles which would sit alongside existing sustainable lending principles and guidance. It is clear, therefore, that regulators and other market bodies will continue to support the growth of these products.

Of course, as the Trump administration again starts to take the US out of the Paris Agreement, divergent approaches to sustainability will pose significant challenges for financial institutions. However, the UK Government claims to remain committed to net zero and we therefore expect sustainable and transition finance to remain a significant feature of the UK banking market in 2025 and beyond.

Intervention, deregulation and divergence

The UK’s financial sector is one of the most important sectors in the UK economy and we have recently seen protective steps being taken as the UK Government strives for economic growth.

One example can be seen in the UK’s approach to the implementation of Basel IV (known as Basel 3.1 in the UK), the aim of which is to achieve more standardisation of financial institutions’ capital risk models, globally. The UK has already demonstrated its post-Brexit sovereignty to take a divergent approach to the EU (which has begun to implement Basel IV, albeit via a phased approach) and following consultation, the UK relaxed certain capital requirements (particularly around SME and infrastructure lending). The Prudential Regulation Authority (in consultation with the UK Treasury) has now delayed implementation until 2027, citing uncertainty around implementation in the US. The longstop date for full implementation currently remains 2030, but given the possibility that the US may substantially revise the requirements, the UK (and the EU) will be concerned that banks may lose a competitive edge. More generally, it seems clear the US will pursue a deregulatory agenda, whilst the UK Chancellor has also made it clear she views regulators as key to achieving economic growth.

Divergent approaches to the implementation of regulatory frameworks will create inherent challenges and uncertainties for financial institutions operating across jurisdictions.

The UK Treasury also recently sought permission to intervene in an appeal due to be heard in the UK Supreme Court this year, on the payment by motor finance lenders of undisclosed (or not fully disclosed) commissions to car dealers arranging motor finance for consumers⁹https://supremecourt.uk/news/uksc-announcement-1. Amid concerns that lenders could be faced with very significant compensation claims if the Supreme Court agrees with an earlier Court of Appeal ruling, the Treasury was reportedly seeking to stress the potential implications for the wider economy. The Supreme Court has rejected this request but the intervention itself was unusual and shows the increasing impact of wider economic concerns.