SPVs and Securitisation
Irish and EU authorities have recognised the importance of non-bank funding to the European economy. The European Commission has made the development of the European securitisation industry a key aspect of the Capital Markets Union (CMU) initiative.
Recognising that a high-quality framework for EU securitisation can promote integration of EU financial markets and help diversify funding sources, the EU Securitisation Regulation came into effect in January 2019. It reinforces the regulatory safeguards and disclosure requirements applying to securitisations and aims to build a sustainable securitisation market.
Securitisation – Stronger and Diversified Capital Markets
Securitisation allows banks to distribute risk across a wide range of investors so that they can engage in further lending. It also provides non-bank sponsors with access to a source of market-based finance.
Securitisation is an effective means to build stronger and more diversified capital markets by increasing the availability of credit and reducing the cost of funding. Unlocking capital makes it easier for credit institutions and lenders to lend to Small and Medium Sized Enterprises (SMEs), Homeowners and Customers. In particular, SPVs have enabled companies in the aircraft leasing, investment funds and reinsurance industries to establish financing companies and manage risk appropriately through the deployment of Special Purpose Vehicles (SPVs).
IDSA is an industry organisation established to promote a responsible, sustainable and effective environment within which debt securities and other specialist securities can be used to facilitate transactions, to create investment products and to raise capital funding, similar to that of the European Commission’s Capital Markets Union (EC CMU) initiative.
Ireland and SPVs
In Ireland, securitisation structures are established as Special Purpose Vehicles (SPVs). The SPV legal, regulatory and tax framework supports and underpins the other main international financial services sectors in Ireland.
Through a highly regarded and trusted legal and regulatory regime and a well-developed infrastructure, Ireland is now the leading European jurisdiction for the establishment and servicing of SPVs, securitisation structures and debt securities. With a network of specialist service providers, directors, advisers, listing agents and trustees, the industry in Ireland supports and services the widest range of structured finance deals. The sector employs 3,650+ people directly and many more indirectly in other industry sectors.
Irish SPVs are part of a wider global industry where:
- 86% of Irish SPVs have been set up by international sponsors
- The US and UK account for 65% of Irish domiciled SPVs
Find out more about Why Ireland for SPVs.
Irish SPVs: The Centre of the IFS Ecosystem