John Curran (Dublin Mid West, Fianna Fail)

I move amendment No. 22:

In page 13, between lines 3 and 4, to insert the following:

"8.—This Act shall not apply to a trust the only property of which consists of—

(a) shares in a qualifying company established for the purposes of section 110 of the Taxes Consolidation Act 1997,

(b) shares in a company whose business consists solely of the leasing of plant and machinery, or

(c) dividends paid in respect of such shares that are not kept by the trust for more than 6 months.".

Deputies will be aware that securitisation is a flagship industry that raises Ireland's profile among the international financial services industries globally. In recent years several major financial institutions have located in Ireland on the basis that Dublin is seen as an EU market leader in the securitisation area. Since Committee Stage it has been brought to my Department's attention by the Department of Finance that the current draft of the Bill could be interpreted in such a way as to oblige the type of charitable trust that is central to the way in which securitisation operates in Ireland to register with the new charities regulatory authority.

I understand a particular concern is that in such circumstances, a legal risk might be created with regard to these trusts and this risk could act as a very significant impediment to conventional securitisation activities. I am advised that securitisation represents an important funding mechanism for the domestic banking sector. If the effect of the Bill was to reduce the scope for using securitisation as a funding mechanism in Ireland, the domestic banks could find themselves at a competitive disadvantage vis-À-vis their foreign competitors. The ultimate result could be higher funding costs that are spread on to Irish customers.

The danger to the existing business is particularly important as it could have detrimental effects, not just on the 1,000 or so persons employed directly in securitisation in Ireland, but in employment in other parts of the international financial services industry here, as well as the wider economy. These effects would be higher costs for borrowing by businesses or persons taking out mortgages.

It was not the intention of the Bill to capture such activities or place the Irish financial services industry at any disadvantage to its competitors overseas, which might have the potential to lead to job losses in this country. Securitisation does not involve fund-raising from the public and the entities themselves are largely inactive for the duration of their existence. Members will be aware that in the current uncertain financial environment in particular, it is essential that established funding mechanisms continue to be fully available to financial institutions and no legal uncertainty is created regarding their usage. I accordingly propose this amendment.

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