IRELAND: CBI to Lift Prohibition on Lending by Investment Funds

Monday July 28 2014

The Central Bank of Ireland (CBI) has published a Consultation Paper entitled ‘Consultation on loan originating Qualifying Investor AIF’. The consultation paper highlights the Central Bank’s intention to lift its prohibition on lending by alternative investment funds (AIFs) and sets out a proposed framework of rules to apply to specialist loan funds (Loan originating Qualifying Investor AIF).

The consultation contains proposals to mitigate financial stability risks including:

• Making Loan Originating Qualifying Investor AIFs closed-ended;
• Leverage limits, and
• Strict requirements on these funds to keep their investors well-informed on the lending they would do.

In addition, key protections are imported from banking regulation concerning credit assessment quality, stress testing and related-party origination. Institutional and professional investors would be the eligible investors.

The proposed rules are the results of a year-long process of discussion and consultation with industry and regulatory peers which included the European Systemic Risk Board.

The consultation period will run for four weeks and submissions should be submitted by close of business on 25 August 2014.

Click on the above link for further details.