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First published in the Finance Dublin year book 2025.
Ireland is recognised as a global financial centre, renowned for its robust regulatory framework, skilled workforce and favourable business environment. Benefiting from the unique position of being an English-speaking common-law jurisdiction, we share common legal principles with the UK and the US, within the broader framework of EU legislation. For decades, Ireland has been a natural bridge between the US and the EU, and remains well positioned as the gateway to one of the world’s largest markets.
Recent geopolitical turbulence across the Atlantic may give some pause for thought. However, there are reasons for optimism. The EU launched its Savings and Investments Union (SIU) on 19 March 2025. The primary strategy of the SIU is twofold:
SIU as an opportunity
Ireland has a well-established financial ecosystem, placing it in an ideal position to maximise the benefits of SIU. As noted in the Department of Finance’s Fund Sector 2030 review (the Review) issued last October, there are approximately 57,000 people employed in Ireland’s international financial services sector, of which over 2,000 are directly employed in the Special Purpose Vehicle (SPV) services industry.
Not only that but, as the Review pointed out, Ireland has the largest securitisation sector in the eurozone in terms of assets under management (AUM). Annual issuance of securitisations in the EU stood at just 0.3% of GDP in 2022, while for the US the figure was 4%. Provided that Ireland’s securitisation framework and ecosystem remains competitive, we are arguably the best positioned EU jurisdiction to capture any growth in the securitisation market, along with the accompanying increase in the number of those employed in this part of Ireland’s financial sector.
Opportunity for re-set in securitisation market
Last October, the EU launched a consultation on the functioning of the EU securitisation framework (the Consultation). The Consultation specifically referenced the recent Noyer, Letta and Draghi reports which, amongst other proposals, called for a re-set and re-launching of the securitisation market in Europe.
Such a re-set would be very welcome and is long awaited.
The EU Securitisation Regulation (the EUSR) was passed with the intention of triggering exponential growth in the European securitisation markets. However, the EU Commission, in its report on the functioning of the EUSR, conceded that the volume of the securitisation market has not increased since its introduction. As estimated in the Draghi report, a minimum annual additional investment of €750-800bn per year is required for the EU to address current challenges such as rapid technological shifts, climate change and new geopolitical dynamics. The SIU specifically notes that this investment demand “cannot rely solely on bank financing”.
As the SIU sets out, if EU households were to align their deposit-to-financial assets ratio with that of US households, a stock of up to €8tn could be redirected to market-based investments – equating to a flow of approximately €350bn on an annual basis. If Ireland could channel a reasonable portion of this into its financial system, the potential growth could be dramatic. In order for this to become a reality, it is important that Ireland can compete for these opportunities on a level playing field with the likes of Luxembourg. One obvious gap under current Irish law (as compared to competing jurisdictions) is the absence of segregated or protected cells for securitisation SPVs (being the equivalent of sub-funds of regulated investment funds). Such a change would make multi-issuance programmes more cost effective, which could, in turn, result in fewer SPVs but greater issuance capacity.
The lack of insurance companies as investors in the EU securitisation market
Despite the comparable size of US and EU insurance companies, it is estimated that the European insurance sector holds only 0.33% of total investment in securitisation, as compared to approximately 17% in the US. This untapped potential must be unlocked. The Eurogroup recently called on the EU Commission to “comprehensively assess all the supply and demand factors holding back the development of the securitisation market in the EU…including the prudential treatment of securitisation for banks and insurance companies…” (emphasis added). Put simply, EU Solvency II legislation needs to be updated to better align the capital charges it imposes on insurers to the genuine risks involved in investing in a securitisation. This one (albeit large) change would unlock an enormous pool of capital for investment in EU securitisations.
Innovation
Ireland has a proven track record of financial innovation and punching above its weight in the investment sector. For example, Ireland was the first EU member state to:
In terms of Irish SPVs, there are two high-growth high-potential markets that Ireland should seek to solidify its reputation as the go-to location in the EU:
Tokenisation involves the conversion of the economic interest or ownership right in an asset into digital form using blockchain technology. This can reduce minimum investment thresholds by “fractionalising assets” (a process that divides high-value assets into smaller, tradable units). While not an altogether new phenomenon, it is being revolutionised by blockchain technology and by opening up markets previously restricted to high-net-worth-investors, tokenisation can truly democratise the capital markets.
Gaining exposure to commodities (or other bespoke assets) was previously the preserve of the few, but has been greatly facilitated by ETCs. Investors can now gain exposure to oil, gold, precious metals and other commodities and assets, without the complexity of investing in the futures market or taking on the risk of delivery of the underlying commodity itself. There is enormous potential for growth in this arena which, if harnessed correctly, would provide ample opportunities for investors in line with the aims of SIU.
The two limbs of the SIU strategy are clearly not mutually exclusive. Rather, they highlight the need for the public and business to work together for the collective good and their mutual gain. Business will benefit by being able to access greater liquidity in the markets, and the public will have the opportunity to invest in a more diverse pool of assets and receive greater returns on their savings.
Ireland is ideally positioned to play a leading role in shaping the future of global finance. Let’s not let the opportunity pass.
For advice or further information on this topic please contact Peter Walker, partner, Seán Ó Maoldomhnaigh, senior associate or any member of ALG’s Capital Markets Debt team.
Date published: 17 June 2025
