European Securitisation Forum proposes amendments to Italian law

In a letter to the Banca d’Italia and the Ministero dell’Economia e delle Finanze, the Italian ministry of the economy and finance, the ESF said changes need to be made to the existing Italian law '130/99', which laid the foundation for the country's securitisation market, to make the legal framework more flexible and allow more types of assets to be securitised.

Corrado Angelelli, partner at law firm Freshfields in Milan and special counsel to ESF, said problems identifying eligible assets and issues relating to the enforceability of transfers of assets in the event of bankruptcy have limited the number of transactions involving future receivables being closed. He said the ESF wants to see changes to address these concerns, along with an amendment to the law to specifically state that a securitised receivable, already existent or a future, due and enforceable, is not subject to the bankruptcy estate of any bankruptcy proceeding commenced against the transferor.

Eugenio Cerioni, co-chairman of the ESF Italian working group, called for better co-ordination between law 130/99 and certain articles of the Italian Civil Code. He said this would allow greater access to the securitisation markets for both the public sector and private developers, because under current rules assets are not adequately segregated. Segregation of both revenue flows and assets involved in a project is critical, he said.

In particular, the ESF would like to see securitisation used more frequently as a source of funding for the Italian real estate market. “Applying securitisation technology to the asset class would give investors a much greater level of protection than currently achieved,” added Holger Beyer, vice-chairman of the ESF.

The ESF also raised a number of concerns about tax. It said clarifying the treatment of tax losses would provide greater certainty to investors. It called for greater clarity regarding tax treatment and withholding of taxes on interest accrued on deposits held by structures established under law 130/99.