UBS Asia-Pacific general counsel: Region to be cheerful

As UBS’s first Asia-Pacific general counsel, Kevin Wilkey is rekindling his love affair with Hong Kong, a land of opportunity and increasing competition

The continued influx of foreign law firms into Hong Kong demonstrates clearly the city’s pulling power in the global legal services market.

UBS’s recent instalment of its first Asia-Pacific general counsel is another manifestation of Hong Kong’s strategic importance. In February 2011 UBS appointed Deutsche Bank veteran Kevin Wilkey to this newly created regional role.

Old hand

Wilkey is no stranger to Asia. Apart from travelling regularly to Hong Kong during his time at Deutsche, where he served as deputy general counsel for the UK and Western ­Europe, was also been based in the city and served as head of Asia legal at Bankers Trust Company, which became part of the German bank in 1998.

In fact, one of the reasons Wilkey was attracted to his new role is the buoyant growth prospects of the Asian economies.

“I was very happy to be chosen for this new role, as I wanted to return to Asia,” Wilkey reveals. “I’ve always been interested in this region and have spent a lot of time here. I know a lot of people here and it’s a great opportunity to work with them again.

“Being part of the growth story is an exciting thing. This is truly the time to be in Asia, where the environment’s very positive and upbeat, ­although the market is still difficult and competitive.”

Regional spread

Among his many new responsibilities, Wilkey’s most strategic role is to stay abreast of everything in the legal and compliance teams across the bank’s investment banking, wealth and asset management businesses in the Asia-Pacific region. He is also tasked with creating a unified legal and compliance department across the various divisions.

“The legal function will still be ­divisionally aligned, but we’re bringing compliance teams in different ­divisions together to make sure we act more uniformly across divisions,” explains Wilkey. “The goal of having a regional focus and strengthening regional coordination is to reduce duplication of work and to ensure as much legal synergy as possible.”

The obvious shift in focus towards Asia in light of global compliance and enforcement is driven by an ­increasing level of investment and ­financing activities. In Wilkey’s view, applying global compliance standards in Asia has never been more important.

“Regulators around the world are keeping in close contact. New compliance requirements and ­approaches in the US and Europe will come to Asia very quickly, without much time lag,” he stresses. “Therefore we need to meet the local ­compliance requirements while ­implementing our global standard and approach.”

Managing to achieve a good level of ­consistency in the legal and compliance function across the Asian markets is critical, but highly challenging. Wilkey, though, knows it by heart.

“The key jurisdictions in the region are all very different from one another,” he says.

“In some countries there’s been a large number of new legislations and regulations and sometimes the regulations in emerging markets are unclear. We need to provide extensive training to our ­employees on new changes in the market and work closely with local regulators and our business units to make informed decisions and ensure everything’s compliant.”

In Hong Kong, for example, the securities regulator recently launched a public consultation paper for its ­proposed new rules governing IPO underwriters, which could impose criminal liabilities for sponsors with a possible sentence of up to three years in prison if they provide false information in prospectuses to investors.

Bringing the business in line with the incoming rules has been keeping Wilkey’s team very busy. The team has also experienced an increasing amount of regulatory investigation activity. In response to the more stringent regulatory environment UBS has recently created a litigation and investigation team, which works on a divisional basis.


Streamlining ahead

Cost pressure is a big challenge faced by every company, including UBS. Last year the bank announced two rounds of layoffs as part of its cost-savings programme, resulting in a total of 5,500 job cuts worldwide.

Although there have not been any layoffs in the legal and compliance department in Asia, there is still ­pressure to optimise internal legal ­resources and improve efficiency.

“The cost of legal counsel is of concern to the company’s management as it’s an important part of the firm’s expense. One of my tasks is to make sure the services provided by both ­internal and external counsel are as cost-effective as possible. We’ve put significant focus on monitoring our relationship with ­external counsel

to get the best price and services,” says Wilkey.

The measures include adopting a more competitive bidding process to ensure external firms deliver more value as well as handling as much work internally as possible.

The initiatives have been successful, with a noticeable reduction in the amount of work going to outside counsel over the past year.

“We’re selectively choosing the right firm, which isn’t necessarily the most expensive firm. In addition to global firms, we consider local firms to be extremely important,” he stresses. “In certain areas, particularly in terms of local law-related ­issues, local firms are better placed to advise. In addition, their cost structure enables them to provide more ­efficient and cost-effective services.”

Although the emphasis on cost is deepening, the increased competition in the legal services sector is sure to drive down costs while also broadening product offerings and enhancing service quality, meaning that, ­despite the ramping up of compliance matters, Wilkey and other ­general counsel in Hong Kong should be able to breathe a little easier.

Kevin Wilkey, Asia-Pacific general counsel, UBS


Position:Asia-Pacific general counsel

Industry: Banking and finance

Reporting to: Group general counsel Markus Diethelm

Employees: Approximately 8,000 in 13 countries across Asia-Pacific

Legal capability:300 in Asia-Pacific

Law firms (for HK IPOs): Fangda Partners, Freshfields Bruckhaus Deringer, Herbert Smith, Linklaters, Commerce & Finance Law Offices

Andrew Loong, head of transaction management, debt capital markets Asia, RBS

As head of transaction management, debt capital markets Asia at RBS, the most challenging issues I face are those that arise out of due diligence on bond issuers, especially first-time capital markets participants. From a risk management perspective, ensuring that robust due diligence has been undertaken is critical in managing RBS’s regulatory and reputational risk profile.

The three most common due diligence challenges are cases where issuers undertake activities in sanctioned countries, corruption or bribery issues in general, and accounting complications.

Activities in sanctioned countries are not uncommon for Asian issuers, especially sovereigns or sovereign-owned institutions.

RBS has strict policies on clients that engage in sanctioned activities. Our main considerations are the nature of any such activities and their materiality in the context of the offering and/or programme.

Often these issues may prove to be insurmountable given their sensitive nature, but we always look to find ways to perform the level of due diligence required to enable us to be comfortable to proceed. We always insist on sanctions-related representations and undertakings from our clients in purchase/subscription agreements. We also undertake thorough Q&A due diligence sessions with issuers.

Corruption is another material due diligence issue that often arises in Asian offerings, especially in light of applicable laws and regulations, such as the US Foreign Corrupt Practices Act and the UK Bribery Act.


Paulina Chan, general counsel, CCB International

In May 2012 the long-awaited Consultation Paper on the Regulation of Sponsors (the proposal) was released by the Securities and Futures Commission of Hong Kong (SFC), proposing to strengthen new listing regulation by further emphasising the gatekeeper role f sponsors, clarifying sponsors’ legal civil and criminal liabilities and consolidating certain sponsor guidelines provisions to the SFC Code of Conduct.

In-house counsel and compliance personnel need to prepare to protect their firms against increased responsibilities under the new regime.

If the proposal is implemented sponsors will need to expand the scope and depth of their due diligence work, not only in relation to the listing applicant and its management, but also to the work of other professional parties. Sponsors’ own internal control systems also have to be enhanced. If sponsors are to assume full responsibility for confirming the adequacy of listing applicants’ internal control systems and completion of remedial measures before A1 submission, more resources have to be deployed.

In-house legal and compliance functions have to step in earlier to review the bulk of the sponsor work and identify effectively suspicious or sensitive issues before A1 submission. It will be also be useful for counsel to participate in more face-to-face interviews and onsite inspections in order to identify potential weaknesses that may arise from an overreliance on external advisers and subjective judgements on evaluation results.