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The Central Bank of Ireland is implementing a streamlined authorisation process for alternative investment fund managers (AIFMs) which engage in loan origination.
This is for AIFMs currently managing loan originating Qualifying Investor Funds and is designed to enable them to meet the requirements of AIFMD 2.0 by 16 April 2026.
AIFMD 2.0 and loan origination
AIFMD 2.0 introduces a harmonised framework for loan origination by AIFs and AIFMs across the EU. These rules must be transposed into national law by 16 April 2026 and apply to all AIFs that originate loans. There are additional requirements for Loan Originating AIFs (LO AIFs) whose main strategy is lending or whose originated loans represent at least 50% of their net asset value.
There are rules at the level of the AIFM as well as at the level of the LO AIF.
AIFMs managing LO AIFs as well as those managing AIFs which intend to originate loans, but do not meet the criteria for LO AIFs, must implement effective policies, procedures and processes for the granting of loans, for assessing credit and for monitoring credit portfolios.
Under AIFMD 2.0, LO AIFs constituted before 15 April 2024 have a five-year transitional period to comply with product rules. All loan originating QIAIFs authorised by the Central Bank prior to this time will be able to avail of this transition period.
The origination of loans on behalf of an AIF is an additional AIFM function requiring authorisation by the Central Bank. There are no grandfathering provisions for AIFMs and so they must have the requisite authorisation by 16 April 2026 in order to continue to manage AIFs which originate loans.
Central Bank's authorisation approach
AIFMs managing loan originating QIAIFs are subject to high governance and oversight standards which are more prescriptive than those that will be in place following introduction of AIFMD 2.0. The Central Bank will take a proportionate approach to authorisation of the Central Bank authorised AIFMs managing loan originating QIAIFs to enable them to achieve authorisation by 16 April 2026.
An AIFM wishing to be authorised to perform the activity of origination loans on behalf of an AIF should follow the authorisation procedure and submit an application to the Central Bank.
AIFM authorization application
The Central Bank has set out the content of the application by AIFMs to the Fund Service Providers Authorisations Team seeking authorisation to provide the Annex I function of origination loans on behalf of an AIF. In addition to the formal application letter, a separate submission must be made including information about the AIFs under management of the AIFM originating loans, policies and procedures in place, alignment with AIFMD 2.0 requirements and issues arising in relation to those AIFs.
The Central Bank will engage with the AIFM in relation to any queries concerning the application with a view to authorising the AIFM for this additional function on 16 April 2026.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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