European financial vehicle corporations (FVCs) engaged in securitisation transactions are required (under EU law) to report certain statistical (non- sensitive) data to their national central bank on a quarterly basis. In Ireland, such reports are made to the Central Bank of Ireland. Irish FVCs are usually Section 110 companies. However, not all Section 110 companies are FVCs.
JULY 2015 QUARTERLY BULLETIN:
In its July 2015 Quarterly Bulletin, the Central Bank signalled its intention to apply this reporting obligation to non- FVC Section 110 companies.
It is taking this step because, while it has been collecting statistical data on FVCs since 2009, it does not have comparable statistical data for non-FVC Section 110 companies, making it harder for the Central Bank to map and monitor the shadow banking sector.
We understand that similar reporting will take place for SPVs in other jurisdictions.
AUGUST 2015 CENTRAL BANK LETTER:
The Central Bank wrote to non-FVC Section 110 companies on 6 August 2015 to inform them that the quarterly reporting obligation for FVCs was being extended to them. It acknowledged that it might not have up-to-date contact information for all such SPVs, but confirmed that SPVs that did not receive the letter would still be subject to the new requirements.
- Non-FVC Section 110 companies must register with the Central Bank prior to submitting returns.
- The first return (for Q3 2015) must be submitted by 20 November 2015.
- The second return (for Q4 2015) must be submitted by 12 February 2016.
- Thereafter, return dates will align with the return dates for FVCs, i.e. the reporting deadline will be the 19th working day after the last day of the quarter (and annual profit and loss details must be provided in each Q1 return in respect of the previous year).
Details of how to register and report are available on the Central Bank’s website.
KEY POINTS ON COMPLETING THE RETURN:
- The return can be made by the SPV or by an agent on its behalf.
- All reporting must be in euro.
- Information must be provided on a ‘best efforts’ or ‘most recently available’ basis (non-FVC Section 110 companies are not expected to generate new data solely for the purposes of complying with the new requirement).
- All Irish companies that are registered as Section 110 companies with the Revenue Commissioners, and which are not FVCs, are in scope.
- For the time being there is no reporting threshold and no derogations are available save that a non-FVC Section 110 company is exempt from reporting where (a) it remains a non-trading entity and (b) it retains a negligible balance sheet position and (c) there are no trading activities planned for it.
Information to be reported is statistical in nature only, will not include sensitive data, and includes statistics on deposits and loan claims (including reverse repos and securities borrowing), debt securities held, debt securities issued, securitised loans, derivatives, loans and deposits received and certain balance sheet items for outstanding amounts and transactions.
The Central Bank’s Notes on Compilation provide further information in relation to the completion of the reporting template.
USING THE DATA:
The Central Bank will use the data to inform itself about the SPV population, and to determine whether a minimum threshold should, at a later date, be applied for reporting by non-FVC Section 110 companies. Data will remain private, and aggregated data will be forwarded to the ECB.
WHAT HAPPENS IF AN SPV DOESN’T COMPLY?
While reporting will be on a ‘best efforts’/‘most recently available’ basis, failure to report (i.e. failure to provide data by the deadline, provision of incorrect or incomplete data, or failure to provide data in the required form) could have the following consequences:
- the Central Bank could apply to the High Court for an order requiring the SPV to comply with the reporting requirement
- an offence will be committed (by the SPV and by any director, manager, secretary or similar individual if the failure took place with his/her consent or approval or due to his/her wilful neglect) under Section 58 of the Central Bank Act 1971.
While the reporting requirement is new for non-FVC Section 110 companies, it is not onerous. Only statistics, rather than sensitive, data is to be reported, and the aim is to enable the Central Bank to better calculate risks to financial stability generally.