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Central Bank of Ireland-Central Bank Data on Financial Vehicle Corporations in Q1 2014

July 2, 2014

ENP Newswire - 02 July 2014

Release date- 01072014 - Total FVC assets values reported in Q1 2014 increased to EUR421.9 billion, which was entirely driven by valuation changes and re-classifications within NAMA vehicles.

Transactions were negative for the fourth consecutive quarter. The number of reporting entities decreased over the quarter, the first fall since Q1 2013, due to an unwinding of a number of smaller FVC vehicles.

The value of total FVC assets increased by EUR3.4 billion to EUR421.9 billion in Q1 2014, while there was an outflow from transactions of EUR4.1 billion (Chart 1). Outflows were mainly as a result of repayment of deposits and loan claims between the NAMA vehicles, as NAMA sold a portion of their loan portfolio. Despite the increase in asset values, the number of reporting vehicles decreased from 715 in Q4 2013 to 708 in Q1 2014, the first fall in reporting numbers since Q1 2013 (Chart 2). This was driven by a fall in reporting numbers for multi-issuance, residential mortgage-backed and synthetic collateralised debt obligation type vehicles.

A new FVC reporting template was introduced for Q1 2014 in order to fulfill new European Central Bank FVC and Balance of Payment reporting requirements[2]. These requirements included greater original maturity, sector, and geographical breakdowns. FVC reporting agents used the updating of the FVC reporting form to make some re-classifications to the FVC data reported. This caused some movements between certain asset and liability classes, which can be seen in Table 1.

The quarter on quarter changes between Q4 2013 and Q1 2014 were largely as a result of these reclassifications.

There was a reclassification of EUR14.5 billion from securitised loans originated by non-euro area residents to securitised loans originated by euro area residents, reflecting better information on the issuer sector.

There were also reclassifications between the following categories:

Securitised loans originated by euro-area MFIs

Securities other than shares

Other securitised assets

Shares and other equity

Debt securities issued by FVCs with over two years original maturity of EUR33.7 billion were re-classified between debt securities issued of up to one year original maturity and loans and deposits received.

Euro area FVCs asset values declined by EUR39 billion in Q1 2014, the ninth consecutive quarterly decline recorded. Euro-area transactions were mainly driven by outflows of EUR30 billion from securitised loans as debt securities issued were re-paid. Ireland's share of euro area assets increased from 21.9 per cent in Q4 2013 to 22.4 per cent this quarter.

Notes to Editors:

These data were collected under the requirements of Regulation (EC) No. 24/2009 concerning statistics on the assets and liabilities of financial vehicle corporations engaged in securitisation transactions (ECB/2008/30), which was passed on 19 December 2008, obliging financial vehicle corporations to report quarterly balance sheets. Reporting is obligatory for all financial vehicle corporations resident in Ireland.

The full data series for Ireland is available on the Central Bank of Ireland website here and euro area statistics are available from the ECB website here.

'Financial vehicle corporations' (FVCs) are undertakings which are constituted pursuant to National or Community Law and whose principal activity meets both of the following criteria:

to carry out securitisation transactions which are insulated from the risk of bankruptcy or any other default of the originator;

to issue securities, securitisation fund units, other debt instruments and/or financial derivatives, and/or to legally or economically own assets underlying the issue of securities, securitisation fund units, other debt instruments and/or financial derivatives that are offered for sale to the public or sold on the basis of private placements.

'Securitisation' refers to a transaction or scheme whereby: (i) an asset or pool of assets is transferred to an entity that is separate from the originator and is created for or serves the purpose of the securitisation; and/or (ii) the credit risk of an asset or pool of assets, or part thereof, is transferred to the investors in the securities, securitisation fund units, other debt instruments and/or financial derivatives issued by an entity that is separate from the originator and is created for or serves the purpose of the securitisation.

[1] Definitions of an FVC and 'securitisation' can be found on page 4 - in Notes to Editors.

[2] Regulation EC No. 24/2009 of the ECB and Guideline ECB/2011/23.

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Source: ENP Newswire

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