Banks boost divorce loans
Finding a bank willing to lend you money to back a business has rarely been tougher, but getting a loan to fund a divorce is increasingly easy, say lawyers.
According to Anne Kay of law firm Boodle Hatfield: “Women who are married to wealthy partners often find themselves temporarily without funds when divorcing their partner. It is ironic that in the current economic climate, lending by private banks to fund divorce appears to be on the increase.”
Private banks prepared to fi nance legal proceedings in London, the world’s divorce capital, include Duncan Lawrie, Coutts and HSBC.
Kay says banks are keen to lend to spouses of wealthy individuals on the grounds they are likely to employ them as advisers when divorces are settled.
The business can be lucrative because the spouses do not tend to be well acquainted with finance.
In deciding how much to lend, banks are guided by legal advisers. Kay says a couple worth between £3m (€3.3m) and £5m could easily run up a £200,000 bill during a divorce case. She says: “A single 90-minute meeting with a QC could cost £7,000, taking account of preparation.”
Lending opportunities have increased because courts are demanding evidence that spouses have tried, and failed, to fi nd bank fi nance before forcing wealthier parties to provide fi nance. Kay says: “It means banks have become the first port of call for spouses.”
A HSBC spokeswoman confi rmed continued interest in divorce finance on a “very selective” basis.
A Coutts spokeswoman says: “We recognise that clients experiencing a divorce face a personal and financial upheaval. To help with this we have developed financial solutions to provide assistance throughout the legal process and beyond.”
Read the digital edition of yesterday's Wealth Bulletin supplement with the Wall Street Journal Europe
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