Page 272 - Invited Paper Session (IPS) - Volume 1

IPS152 Giovanna B. et al.
3. Challenges in the context of business models
In this section, we aim to assess some of the structures of Irish SPEs
against the guidance provided by the TFSPE. The two business models outline
the typical activities undertaken by Irish-resident SPEs. While these models
do not cover the whole range of activities, they provide good guidance for
assessing the criteria proposed by the TFSPE definition. For each model, we
try to highlight those characteristics that challenge the identification of
fundamental concepts such as institutional units, and economic and legal
ownership. In order to tackle the relevance for External Statistics and to shed
some light on their behaviour, we also look at the geographical composition
of their portfolios. With this in mind, we first look at the average foreign
portfolio share for both the assets and liabilities side and then we look at their
distribution. Finally, we set thresholds on their portfolio composition and
highlight the number of vehicles that have the following characteristics:
• Foreign assets and liabilities over total assets > 80 percent (pass-
through);
• Foreign assets and domestic liabilities over total assets > 80 percent
(mixed ass_liab);
• Domestic assets and foreign liabilities over total assets > 80 percent
(mixed liab_ass);
• Domestic asset and liabilities over total assets > 80 percent
(domestic)

Particular attention is given to the breakdown of domestic versus foreign
sponsored entities, in order to understand whether the nature of the sponsor
matters for the cross-border activities of the SPEs.

External financing model
This case study outlines a structure in which an Irish SPE is set up by a
foreign company (e.g. emerging market bank) to obtain funding from third
parties. The Irish SPE obtains financing from the issuance of profit
participation notes backed by the sponsor. The proceeds of these notes are
passed from the Irish SPE to the sponsor as a loan. The SPE is set up as a
stand-alone entity outside of the sponsor’s group structure, with a charity or
other body technically owning the SPE so that assets are not accessible by the
bank.

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