Italy: Recent Amendments To The Italian Securitisation Law

Introduction

This alert analyses the amendments made to Italian law no. 130 of 30 April 1999 on receivables securitisation ("Law 130") by article 1, paragraphs 214 and 215 of Italian law no. 178 of 30 December 2020 ("2021 Budget Law"), pursuant to which the scope of Law 130 was broadened and the interpretation of paragraph 4 of article 7.1 of Law 130 was clarified.

Regulatory framework and amendments over the years

Law 130 was subject to different regulatory interventions over the years:

(a) Law Decree no. 50 of 24 April 2017, converted into Law no. 96 of 24 April 2017, introduced a specific discipline for the securitisation of non-performing receivables, providing, among other things, the possible creation of an ad hoc special purpose vehicle aimed at purchasing, managing and fostering real estate assets securing the securitised receivables, including the assets subject to financial lease agreements, in the sole interest of the securitisation;

(b) Law no. 145 of 30 December 2018 introduced certain provisions dedicated to (i) securitisation with underlying bonds; (ii) loans made available by the securitisation SPV; (iii) synthetic securitisations; e (iv) securitisations of income deriving from ownership of real estate assets;

(c) Law Decree no. 34 of 30 April 2019, converted into Law no. 58 of 28 June 2019 (so called Decreto Crescita) made few amendments to receivables securitisation such as: (i) with reference to securitisations of receivables deriving from credit lines and classified as UTPs, the possibility of transferring the commitments or the right to disburse them to a bank or financial intermediary separately from the account to which the credit line is linked but maintaining the domiciliation of the account; (ii) the possibility of setting up several support vehicle companies for the acquisition, management and enhancement of real estate or registered movable property and to apply article 58 of the Italian Financial Consolidated Act to transfers to support vehicle companies of such real estate or registered assets even in the absence of the identification of a pool;

(d) Law Decree no. 162 of 30 December 2019, converted into Law no. 8 of 28 February 2020 (so called Decreto Milleproroghe 2020) has (i) governed in greater detail the so called "direct lending"; (ii) widened the scope of the rules that facilitate the securitisation of receivables deriving from credit lines; and (iii) completed the rules on securitisation with financing (so called sub-participation).

Amendments introduced by 2021 Budget Law

Article 1, paragraphs 214 and 215 of 2021 Budget Law further amended Law 130.

Amendment to the scope of Law 130

Article 1 of Law 130 clarifies that said law applies to transactions carried out through the assignment for consideration of pecuniary receivables, both existing and future receivables, identifiable in pool when there are several receivables, if two requirements are met. One of the requirements, which has remained unchanged, relates to the fact that the transferee (or the issuer of the notes, if different from the transferee) shall be a joint stock company with the sole purpose of carrying out one or more securitisation transactions.

2021 Budget Law instead amended the second requirement:

• before the entry into force of Budget Law 2021, sums paid by the assigned debtor/s were intended exclusively, by the transferee company, to the satisfaction of the rights incorporated in the notes issued by said transferee or by another company to finalise the purchase of the receivables, as well as to pay any transaction costs;
• after the entry into force of Budget Law 2021 (e. 1 January 2021), any sums (a) paid by the assigned debtor/s or (b) in any case received in satisfaction of the assigned receivables, are intended exclusively, by the transferee, to the satisfaction of the rights incorporated in the notes issued by said transferee or by another company, or to the satisfaction of rights deriving from the loans made available to the transferee by authorised entities to finance the purchase of the receivables, as well as to pay any transaction costs. It is also clarified that, in case of granting of loans, any reference contained in Law 130 to the notes issued for the securitisation shall refer to loans and any reference to noteholders shall also refer to lenders.

Therefore, paragraph 214 of article 1 of 2021 Budget Law, by amending article 1, paragraph 1, lett. (b) of Law 130, has:

(a) introduced the possibility of structuring securitisation transactions according to a simpler operational and managerial level when compared to bonds issues, as it introduced the possibility for securitisation SPVs to finance the acquisition of receivables also through loans made available by authorised entities. Under the previous regulatory framework, SPVs were instead allowed to finance the purchase of receivables exclusively through the issue of notes (save for certain exceptional cases);

(b) extended assets segregation, by providing that - not only sums paid by the assigned debtor/s (as already provided in the past) - but also sums "in any way received in satisfaction of the assigned receivables" may be intended to satisfy the rights incorporated in the notes issued or in the loan granted, as well as any transaction costs.

Authentic interpretation of article 7.1, paragraph 4

Paragraph 215 of 2021 Budget Law contains an interpretative rule relating to securitisation of non-performing receivables by banks and financial intermediaries. The aforementioned paragraph 4, in particular, establishes that one or more support vehicle companies (so called LeaseCo or ReoCo) may be set up having as their exclusive corporate purpose the acquisition, management and fostering of real estate assets and registered movable assets, as well as any other assets or rights connected or created as security of the securitised receivables (including assets subject to financial lease agreements and any relationships deriving therefrom) in the sole interest of the securitisation.

Without changing the wording of the rule, paragraph 4 of article 7.1 of Law 130 clarifies that this provision is to be interpreted as meaning that the acquisition by support vehicle companies, of the mentioned assets - including assets subject to financial lease agreements, even if terminated, together with any relationships deriving therefrom - may also take place as a result of demergers or other aggregation transactions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.