By Cian Leahy, Head of Debt and Capital Markets Accounting
Amidst the rising tide of interest in securitisation and special purpose vehicles (SPVs) in Europe, Ireland has solidified its position as a global securitisation centre. Today, Ireland’s strategic role in European capital formation is stronger than ever, thanks to its competitive regulatory framework, robust legal system and highly skilled workforce.
In this article, we explore what makes Ireland such a compelling jurisdiction for securitisation and SPVs in Europe.
What is securitisation and what are SPVs?
Securitisation is the process by which financial assets—for example, loans, leases, receivables or mortgage-backed securities—are pooled and repackaged into packages called securities for sale to investors.
SPVs are legal entities separate from the organisation that created them, with a fully separate balance sheet to isolate financial risk. SPVs are often used as holding companies for securitised debt, helping to create liquidity and minimise risk.
EU securitisation is on the rise
Policymakers in Europe recognise securitisation as a powerful lever for mobilising private capital to help address strategic goals. Securitisation can contribute significantly to market development by freeing up balance sheets, allowing lenders to extend more capital to both corporate and private borrowers while creating another asset class for investors.
The European Commission’s recent consultation demonstrates a renewed commitment to the European securities market, which could have a transformative impact on the economy. The consultation aims to collect feedback on the current securitisation framework and identify areas for improvement, promoting a market that supports the EU economy without creating outsized risk.
Despite the short consultation period, the European Commission is showing a willingness to scrutinise regulatory requirements that have sometimes been burdensome (as with reporting requirements). These efforts are expected to bolster the securities market further over the coming years.
Why Ireland is a leading EU jurisdiction for SPVs and securities
As of Q2 2024, there were nearly 3,500 active SPVs in Ireland holding combined assets exceeding €1.1 trillion. This figure represents an all-time high, accounting for more than one-third of EU market securitisation SPVs. Central Bank of Ireland figures also show that the market has increased consistently since EU regulators turned their attention to securitisation in 2019.
Several factors have contributed to Ireland’s role as a leader in the European securities market:
- Trusted legal system: SPVs are established as companies in Ireland and are therefore subject to Irish laws and regulations. As a Common Law jurisdiction, Ireland provides investor protections familiar to those in other English-speaking jurisdictions like the U.S. and the UK
- Regulatory regime: The Section 110 regime remains unchanged and qualifies SPVs for tax neutrality in Ireland
- Infrastructure: Because Ireland has long been active in the securities market, the country hosts an extensive network of English-speaking specialist service providers who can support a wide range of structured finance deals
- Double Taxation Treaties: Ireland also boasts a double taxation treaty network of over 70 countries worldwide
- EU ‘passport’: Once approved by the Central Bank of Ireland (CBI), securities issued by an Irish SPV can be marketed throughout the EU
- Listing mechanism: Irish SPVs also gain access to Euronext Dublin, which has extensive experience listing specialised debt securities
- Location: With good air connectivity to both the U.S. and Europe, Ireland sits in an easily accessible location
Conclusion
Ireland provides a favourable environment for securitisation and SPVs in Europe, so it’s no surprise that it continues to strengthen its position as a leading global jurisdiction in the space. As the EU renews its focus on securitisation as a tool for economic growth, Ireland’s competitive advantages make it an ideal jurisdiction for secure, compliant and efficient SPVs.
Still have questions about securitisation in Europe? Contact our expert team for support.
About the author
Cian has almost 15 years’ experience in various accounting, finance and auditing roles across the corporate and financial services industry. Currently, he is leading IQ-EQ’s Capital Markets Accounting team in Ireland, who provide corporate, financial reporting and cash management services to our clients. Cian is an experienced accounting and company director having served on numerous client boards over the previous 10 years.
