LUXEMBOURG Trends and Developments Contributed by: Andreas Heinzmann, Manuel Fernandez, Valerio Scollo and Katharina Schramm, GSK Stockmann SA
deposits or other repayable funds from the pub - lic; ie, its lending activity is financed by its own funds and borrowing from affiliates and banks. The capital requirements imposed on banks fol - lowing the financial crisis in 2008 have been, in part, considered as having contributed to the reduction of the lending activities of certain EU banks. The reduction of bank lending has led to a gap in available bank funding for the EU econ - omy. Therefore, the EU has aimed at fostering lending solutions to spur growth within the EU. One of the tools to pursue this goal was the pro - motion of a label of “high-quality securitisation” under the EU Securitisation Regulation, also for the purpose of achieving a Capital Markets Union (CMU) so that securitisation is recognised again as a tool to diversify the sources of financ - ing for the real economy. Undertakings qualifying under the Securitisa - tion Law are expressly excluded from the scope of the Financial Sector Law, similar to alterna - tive investment funds qualifying under Directive 2011/61/EU of the European Parliament and the Council of 8 June 2011 on Alternative Invest - ment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (AIFMD). Securitisation vehicles can therefore, in princi - ple, act as first lenders but are not permitted to arrange loans. This means that securitisation undertakings may, in principle, act as lenders and provide loans to corporate borrowers pro - vided they do not carry out a credit activity on their own account and do not raise funds from the public. Further, the loan agreement must not have been negotiated by, or on behalf of, the securitisation vehicle. The latter is in line with the general idea of passive management, save
for the active management of securitised assets in certain types of transactions as now allowed under the Securitisation Law, of the assets allocated to a securitisation vehicle and that a securitisation vehicle should not itself create the risk pertaining to a loan origination, such as the identification and screening of the borrowers, the credit risk assessment and the negotiation of the loan agreement. The documentation relating to a securitisation vehicle acting as first lender must therefore either clearly define the assets on which the service and the repayment of the loans grant - ed by the securitisation vehicle will depend, or clearly describe the borrower(s) and/or the cri - teria according to which the borrowers will be selected, so that the investors are adequately informed of the risks, including the credit risks and the profitability of their investment at the time securities are issued by the securitisation vehicle. According to a guidance note of the European Central Bank, which is relevant to assess the qualification of a securitisation under the Alter - native Investment Fund Managers Directive (AIFMD), securitisation transactions may consist of the “adhesion by the purchaser to a set of pre - determined terms that are identical or essentially similar to those on offer to other investors”, such as participation in a loan syndication, unless the vehicle has underwriting responsibilities. Tokenisation of Securities Luxembourg has taken important steps to pro - mote the digitalisation of the capital markets and introduced a “digital” security alongside the existing framework applicable to bearer, regis - tered and dematerialised securities. The Lux - embourg Law of 1 March 2019 (the “Blockchain Law I”) established that a security token held
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