New regulatory framework to allow for specialist loan funds

The Central Bank has established a new regulatory framework to allow for the establishment of specialist loan funds.

Up until now, the legislation has restricted collective investment schemes from lending into the Irish market, primarily because the loan arrangements were deemed less than transparent.

The new regulatory regime – the first to be developed in the EU – allows for specialist loan funds to be created provided they operate under a strict code and adhere to certain leveraging controls and credit assessment rules.

The move is seen as a response to the growing demand for alternatives to bank finance.

The funds will be open to qualifying investors including pension funds, insurers, banks and high net-worth individuals that make an initial minimum investment of €100,000.

"This is a significant development for the funds industry in Ireland. This will bring new funds, new projects and new expertise to the Irish funds industry and will position us as the clear domicile of choice for loan origination funds in Europe," Pat Lardner, chief executive of the Irish Funds Industry Association, said.