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Stephen Mulrenan reports from Tokyo where the changes to the permitted activities for registered lawyers have left foreign lawyers frustrated

Under the German Banking Act, banks and financial services institutions are obliged to have an appropriate amount of own funds to meet their obligations to their creditors. The various risks arising from their business must be recorded in their trading book and in their banking book, weighted and backed by own funds. The rules as to how this should be done were announced by the German Federal Banking Supervisory Office (BAKred) in October 1997 in its Changes and Supplements to the Principles Concerning the Capital and Liquidity of Institutions which, for the most part, came into effect on October 1 1998. The essential item is the new Principle I which regulates capital requirements for market risks (foreign currency risks, commodity risks and position risks from trading book transactions) and counterparty risks (credit risks).

The task force on the future of the Canadian financial services sector was established by the Canadian government in December 1996 to undertake a careful, independent and objective analysis of the broad trends affecting the Canadian financial services industry, and to provide advice on public policy issues to help the government develop a framework for the industry in the 21st century. The task force was comprised of an independent and diverse group of individuals under the chairmanship of lawyer Harold MacKay.

In a highly significant case under the US bankruptcy laws, Hong Kong and Shanghai Banking Corporation v Simon [9th Cir 1998], the US Court of Appeals for the Ninth Circuit ruled that a foreign creditor may not bring a foreign collection proceeding against a debtor that has obtained a discharge under the bankruptcy law. In so doing, the Ninth Circuit has affirmed the extraterritorial effect of the US Bankruptcy Code.

US firms Cleary Gottlieb Steen & Hamilton and White & Case took the lead on the US$300 million 10-year issue by the state-owned Electricity Generating Authority of Thailand (EGAT) which closed on October 14. The issue, sold under Rule 144A in the US, incorporated a World Bank guarantee of principal and interest (on a partial basis), the first time the World Bank has provided a guarantee of principal and a single coupon payment on a rolling basis. Through this structure, Asian borrowers can access the global markets without incurring the risk premiums imposed since the financial downturn in July 1997.

UK firm Allen & Overy has provided advice to the project company and the sponsors of a US$373 million project finance deal in Vietnam. The Nghi Son Cement Company project is one of the largest project finance deals in Vietnam this year and one of the first deals to be financed with a multi-tranche limited recourse facility. It is also one of the first times that an offshore account has been used to channel finance directly to a project in Vietnam.

Formula One Holdings, which controls television rights for the motor racing world championship is planning a US$2 billion Eurobond issue within the next few weeks. The issue through Formula One Finance BV replaces plans for a flotation of Formula One Holdings. The flotation was abandoned last year following an inquiry by the European Commission into the relationship between motor racing's governing body, the FIA, the television broadcasters and the Formula One companies. The bond issue may be a preparatory move before another flotation attempt.

Lex Mundi, the international association of law firms, has decided to change its policy of excluding firms in New York, London, Washington DC, California, Texas and Illinois. It is now seeking one of the leading firms in each location to join its members. Washington DC's Steptoe & Johnson LLP is the first firm to take advantage of Lex Mundi's policy change to join the international alliance.

The decision of the UK High Court which threw the use of Chinese walls in professional firms into doubt has been overturned. The Court of Appeal has removed the injunction from accountant KPMG which barred it from acting for the Brunei Investment Agency on an investigation into the Agency's former activities. Woolf MR, giving the judgment of the court, said that the approach to such a case should be: to determine the existence of confidential information which might harm a former client; to determine whether there was a risk of that information being disclosed; and whether the former fiduciary relationship was so strong that the court should intervene with an injunction. These issues were to be determined on the facts of each case.

Allen & Overy is gaining an office in Bangkok as a result of its merger with local firm MPS & Associates. The firm already has regional offices in Beijing, Hong Kong, Singapore & Tokyo. MPS & Associates is a 18 lawyer corporate firm, working with international as well as domestic clients. It is well regarded for its banking and capital markets work. The three existing partners of MPS & Associates – Pises Sethsathira, Simon Makinson and Surapon Satimanont – will become partners in Allen & Overy on November 1.