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IPS152 Giovanna B. et al.

This framework outlines clearly the challenges in identifying control, its
foreign and domestic nature and thus the concept of an institutional unit. The
domestic legal owner does not exert control. Benefits are likely to be gained
abroad and shared between the sponsor and the note holders.
However, the analysis of the sub-sample of SPEs classified as External
Financing, suggests that in a number of cases the sponsor is a domestic NFC
and its balance sheet is exposed to foreign entities.
This would suggest that distinguishing between foreign and domestic
controlled entities and consolidating domestic ones may not only be
challenging but may also prevent distinguishing flows with a nature different
from the functional category in which they are incorporated.
In Q4 2018, 64 SPEs (€56.6 billion) representing more than 34 percent of
the total asset value of non-securitisation SPEs, were classified as External
1
Financing . The bulk of them were sponsored by foreign banks and NFCs. NFCs
resident in Luxemburg and Ireland were also important players. 29 entities
(€33.6 billion) – mostly NFCs - reported to be consolidated in a group and
provided information on the ultimate parent. The ultimate parent and the
sponsor were likely to be the same entity. Looking at the external financing
SPEs portfolio composition, we find that on average 71 percent of their assets
2
and 69 percent of their liabilities are foreign. Most importantly, if we look at
the distribution of foreign assets and liabilities over total assets, it is clear that
their behaviour is extremely polarised and that the average is quite

1 In the Central Bank survey, external financing vehicles are defined as funding obtained from
external sources, furthered as a loan to the parent.
2 As mall of asset and liability, positions are not disaggregated by country on the reporting form.
Therefore the sum of foreign and domestic position as a share of total assets/liabilities may not
sum to 100 per cent.
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