Ireland To OK Hedge-Fund Direct Lending

Jul 28 2014 | 10:48am ET

One of the hedge fund industry’s biggest bases is set to allow one of its fastest-growing strategies to take root.

Ireland is set to permit direct lending by hedge funds for the first time under new regulations set to come into force by the end of the year. Currently, hedge funds domiciled in the country are not permitted to make loans.

The Irish central bank’s change of heart comes amidst a credit crunch in Europe, as banks shy away from lending to smaller firms.

The new rules, discussed in a consultation paper published today, will allow specialized loan funds to seek authorization to lend international, the bank said.

“In our view, this is a sector that should be subject to some additional regulation,” the bank’s head of markets policy, Martin Moloney, told Reuters. “If you have loan origination funds operating out of Ireland and lending into other countries there are potential cross-border issues. We wanted to deal with that upfront and we have been very focused on the financial stability issues.”


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