Direct lending of securitisation SPVs - New supervisory instructions from Bank of Italy

Debt Capital Markets Italy – Newsflash no. 1/2016

Finance Update


On 9 March 2016, Bank of Italy published new updates to its supervisory instructions for banks and financial intermediaries, related to the granting of loans by securitization vehicles.

The Law Decree no. 91/2014, as amended and converted into Law no. 116/2014 (the so called "Decreto Competitività"), dated 24 June 2014, had amended the Italian Securitization Law (Law no. 130 of 1999), allowing SPVs to grant loans to entities other than natural persons and small cap companies.

Following a public consultation, Bank of Italy intended to discipline, through relevant Circulars, this new possibility on the Italian market. In particular, the granting of loans by SPVs is subject to the following requirements:

  • The borrowers must be selected by a bank or a financial intermediary registered under art. 106 of the Italian Banking Act;
  • The securities issued by the SPV in respect of such loans are reserved to qualified investors only;
  • The bank or the financial intermediary must retain a significant economic interest in the transaction, as set out in Regulation (UE) no. 575/2013 (CRR Regulation);
  • The entities selecting the borrowers will apply, in the assessment of the creditworthiness, the same criteria and procedures applicable when they grant loans. Similarly, such entities will use risks control and credit quality supervision procedures they normally use in their credit activities;
  • The servicer is required to verify that the (i) retention rule has been respected; (ii)  procedures for the selection of borrowers are carried out in compliance with the above mentioned rules; and (iii) investors received an appropriate disclosure of information.

These new provisions entered into force on 9 March 2016 and are available at the following websites (in Italian language only):

  1. update no. 15, dated 8 March 2016, to the Circular no. 285 "Supervisory instructions for Banks"
  2. update no. 1, dated 8 March 2016, to the Circular no. 288 "Supervisory instructions for financial intermediaries"