The Royal Bank of Scotland: Following different paths

The success of the in-house legal team of The Royal Bank of Scotland in Iberia is driven by its ability to operate autonomously, which includes finding different paths to its distinct Portuguese and Spanish legal needs

Having joined The Royal Bank of Scotland (RBS) shortly after it entered Spain in 2001, Silvia Madrid was given the responsibility to build and develop both the bank’s local legal and compliance function. In 2005 the bank expanded into Portugal and since then she also oversees matters there too.

‘Initially much of the work we were involved with was related to the bank’s establishment and structural issues, but as RBS became more established and active in the market there was a dramatic increase in issues arising from the expanding transactional business, such as syndicated financing, project finance, real estate finance and financial markets operations,’ she explains.

As Regional General Counsel Iberia, she reports to both the Head of Legal in the UK Laila Page and the Chief Operating Officer of RBS in Spain Miguel Angel Fernández. ‘The legal department is however encouraged to work independently, much emphasis is placed on the importance of our local knowledge and judgement and on our ability to raise issues where we feel it is necessary,’ she says.

A similar approach is taken to the external law firms used. ‘We are not interested in micro-managing work.

The aim is to manage the bank’s legal risks in the most efficient ways, and how we do this is by combining our own skills with those of the lawyers we use externally.’

El éxito del equipo jurí­dico de The Royal Bank of Scotland (RBS) en la Pení­nsula Ibérica está impulsado por su capacidad de operar de manera autónoma, lo que incluye encontrar diferentes caminos para las necesidades en España y Portugal. Habiéndose unido a RBS poco después de su entrada en España en 2001, a Silvia Madrid se le encomendó la responsabilidad de construir y desarrollar tanto la función legal como la de cumplimiento normativo del banco. En 2005 RBS se expandió a Portugal y desde entonces también supervisa las cuestiones portuguesas.

A significant element of her early role was to create a panel of outside law firms to specifically manage the bank’s external Spanish legal needs. ‘We are a small team and it was clearly not viable for us to manage everything we need to do in-house. RBS uses a panel in the UK and elsewhere and the decision was made to do the same here,’ she says.

The process was therefore initiated and managed from Madrid, with five firms subsequently selected, with which the legal team now works most closely.

‘Our panel for Spanish work is dominated by UK-based firms because a large proportion of the financing work that RBS does here still has a significant English law element. It made sense to be able to jointly manage both the local and international capability,’ she says.

In Portugal, RBS has however taken an alternative path. The bank there encounters fewer UK-led transactions and so Silvia is comfortable to get UK advice on an ‘as needs basis’, either from her colleagues in London or externally.

‘We have no domestic in-house Portuguese legal capacity but instead have agreed a retainer arrangement with one of the major Lisbon firm that provides us with a lawyer, effectively working on secondment, who looks after all the bank’s local day-to-day issues,’ she explains.

The core focus of her own team is therefore placed on the bank’s core every day needs – including commercial contracts, confidentiality agreements, loan and finance terms – as well as the support to the Infrastructure functions, including the COO’s office, while the work sent externally includes more specialised and complex transactions.

‘It would be impossible for us to manage all of the banks needs and we therefore rely strongly on our outside counsel. We review what we feel we need to but we also place much responsibility on the law firms themselves, we believe that it is the role of the partner to highlight what may be the most significant issues for us,’ she says.

Much of the team’s current workload is dominated by the work of RBS’ Global Restructuring Group, including managing the issues arising from bankruptcies, defaults and write-downs in which RBS has an interest, as well as the continuing integration and divestment issues following its 2007 €70bn merger with ABN AMRO.

Despite the fall-out from that merger, and the issues that have subsequently surrounded the bank’s effective nationalisation in the UK, its Iberian operations remain only minimally affected by events internationally.

‘RBS in Spain and Portugal has its own clients and relationships and we tend to manage all the issues arising out of local transactions. The growth of the bank has not made our work any easier or more difficult. It has instead been a case of having to manage the different challenges presented to us – all of which keeps things interesting,’ she says.

Silvia Madrid is The Regional General Counsel for The Royal Bank of Scotland España and Portugal and a winner of Iberian Lawyer’s Forty under 40 Awards 2009.