Securitisation
Securitisation allows the risks connected to all types of assets and property (financial, movable and immovable, tangible and intangible, debt claims, future cash flow, etc.) to be transferred to a specific entity. The scope of application of the Securitisation Law varies widely, as it is now possible to securitise numerous types of assets, risks, income or activity by means of this vehicle. Securitisation is accessible to everyone and to all types of investors (corporate, private or institutional). The Securitisation Law was passed on 22 March 2004; it is based on the concept of the fiduciary estate recently introduced into Luxembourg law.
The Law of 22 March 2004 lays down the legal framework that allows securitisation vehicles to be created. Securitisation allows the transferor (company, firm or natural person) to transfer to a Securitisation Vehicle those risks linked to debt instruments, to other assets or to commitments undertaken by third parties or fully or partly inherent in business activities, through the issue of stocks and bonds whose value or yield depend on these risks.
These assets or risks are represented by registered or bearer securities (shares, bonds or certificates) representing the income or cash flow that is generated.
There are two types of securitisation vehicles offered by the Luxembourg market to investors and financial services providers.
In the many examples that follow, readers will be able to observe how the law on securitisation will work as a competitive tool thanks to its broad scope of application.
Securitisation of the credit portfolio of a company is commonly given as an example but the Law provides for many other areas, including those connected to private or family wealth planning.
Indeed the Securitisation Law allows companies or individuals to withdraw some assets from their wealth, placing them with a Luxembourg securitisation vehicle, to avoid having to undertake the risk of holding or managing these assets. Investors thus finance the securitisation vehicle issuing the securities; and in this way bear the risks in connection with the assets held by that entity.
The Law includes all transactions by which a securitisation vehicle acquires or assumes a risk linked to an asset. Financing of transactions is achieved by issuing shares, bonds or any other types of security (certificates, EMTNs or subordinated loans).
By force of Law, all the following assets may undergo securitisation: commercial debt, mortgages, current accounts, shares, debenture loans whether subordinated or not, any financial asset, any immovable asset (including real estate or rights in rem) but also all activities with a certain and reasonable value as well as all activities with a future income. Trackers may be issued by a securitisation vehicle. The most diverse business risks may also be transferred to a securitisation vehicle.
Fidomes - Member of European Securitisation Forum
Fidomes is henceforth member of the European Forum on Securitisation. Since the introduction of the law on Securitisation in
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1. Legal, Regulatory & Capital
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2. Securitisation Accounting
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3. Market Standards & Practices
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4. Synthetic Securitisation
Missions of the European Securitisation Forum (www.europeansecuritisation.com)
The purpose of the European Securitisation Forum (“ESF” or “Forum”) is to promote the efficient growth and continued development of securitisation throughout Europe, and to advocate the positions, represent the interests, and serve the needs of its members — European securitisation market participants. To achieve this goal, the ESF seeks to increase awareness, build consensus and pursue advocacy projects relating to a broad array of legal, regulatory, accounting, capital, tax and other issues that impact the European securitisation markets, working with relevant European regulators and standards-setters. The EFS also attempts to identify, recommend and implement market standardisation policies, practices, guidelines and related documentation, to promote liquidity, transparency and efficiency in the primary and secondary European securitisation markets. The Forum also undertakes initiatives designed to educate and inform external constituencies, including legislative and regulatory officials, the financial media, industry participants and others concerning the operation, importance and policy benefits of the securitisation markets and related activities throughout
Fidomes’ participation
Joining several committees, Fidomes will bring its “know how” and experience as well as opportunities offered by the
Fidomes will also contribute to conferences intended to inform the securitisation market’s actors and the forum members among which we find bankers such as Barclays, BNP Paribas, ABN Amro, Fortis, ING, Crédit Suisse, Dexia, Bank of New York, Deutsch Bank, JP Morgan, HSBC, Lloyds, UBS and a lot of others services providers in the securitisation area as Bloomberg, KPMG, PWC, E&Y, Clifford Chance, stock exchange companies, issuers, intermediate brokers, rating agencies, …
Fidomes proposes its customers a wide range of services in securitisation as incorporation and conceptualization of securitisation undertakings, tax advices, legal advice related to these operations, accounting, funds valorisation, participation to stock and shares’ incomes, on-line publication of valorisation, financial reportings, …
