Bankers Duty of Confidentiality and Securitization of Financial Assets

Bankers have access to private and sensitive financial information of their clients, due to the nature of their professions. So, legal systems consider that “secrecy” is a fundamental precept of the banks and customers relationship. In other words, they are subject to an obligation to keep their customers financial affairs confidential.In (English) common law jurisdiction, confidentiality is a contractual (or implied contractual) duty as well as statutory duties especially in relation with data protections.According to the Civil Law jurisdictions, such as the law of France, Switzerland, Germany, Egypt, Lebanon, and Iran, the duty of confidentiality arise, under the civil code or related statutes.The “secrecy” is not absolute: almost in all countries this duty has exceptions: anti money laundering laws observations, when disclosures is required in the interest of the bank, where according to banking ordinary operation, exchange of information and data about the client’s credit, between the banks is usual and necessary for being ensured about banking operation, and the like. Due to the importance of this duty, any breach of confidentiality has penal and civil sanctions. Thses sanctions are different in legal systems and in different countries.In securitization transactions, serial parties such as SPV, rating agencies, liquidity provider’s trustees and servicing agents, may need potentially confidential information concerning the financial assets and loans. Sometimes, it is necessary for them to have access to the documents relating to the receivables. This contradiction is one of the main questions about the securitization of banking receivables that must be solved. The ideal way is to obtain the underling debtor’s consent about data transferring; obtaining of debtor's consent is very complicated and hard work to do.Another alternative is to amend forms and contracts which banks uses in relation with their customers. Finally, the best alternative is that securitization of transactions to be excluded from confidentiality duties, by legislation.