Briefing

Loan originating qualifying investor AIF

On 28 July 2014 the Central Bank of Ireland issued Consultation Paper 85 with regards to loan originating Qualifying Investor Alternative Investment Funds ("QIAIFs") which will permit Irish funds to originate loans directly. In its consultation paper, the Central Bank is proposing to permit QIAIFs to derogate from its general prohibition on lending subject to specific investor protections and risk management safeguards.

In its consultation paper, the Central Bank is proposing to permit QIAIFs to derogate from its general prohibition on lending subject to specific investor protections and risk management safeguards. These safeguards are being put in place to mitigate the risks that the Central Bank sees as critical to loan originating funds:

  • risks of regulatory arbitrage;
  • risks of runs in investment funds;
  • contagion risk with the banking sector; and
  • risks of excessive credit growth and procyclicality.

A new chapter to the Central Bank’s AIF Rulebook will also be introduced to provide for loan originating QIAIFs.

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