Russian companies outside the banking sector accounted for more than 60% of the €35.5 billion in assets held in Irish special purpose vehicles (SPVs) used for financing purposes at the end of last year, according to the Central Bank of Ireland.
Assets held in 33 Russia-linked SPVs in the Republic – also known as special purpose entities (SPEs) – represent less than 4% of the total held in Irish SPVs, as of September last year.
“Russian-sponsored SPEs primarily engage in external financing activities where they issue debt to the Irish SPV to raise funds for the parent company,” the Central Bank said in a document posted Friday at links. Republic’s direct financiers with Russia, as the country found itself hit by a wave of Western sanctions following its attack on Ukraine last week.
Still, the document notes that the assets and number of Russian-sponsored SPEs have declined since 2016, largely due to a decline in vehicles linked to the country’s banks, as some have been unable to issue new debt after the introduction of sanctions in 2014, when Vladimir Putin’s government annexed Crimea.
Section 110 of the tax laws introduced in 1997 to incentivize companies to set up SPVs and establish the state as a global financing and fundraising hub has made the country one of the world’s largest locations for SPV. It is estimated that lawyers, accountants and bankers generated around €400 million in fees from Irish SPVs in 2020.
The United States is the main global location for these so-called structured finance vehicles used by companies to raise funds in the bond and private markets.
Meanwhile, the Central Bank document confirmed there were some €11.4 billion of Russian assets in Irish-domiciled funds at the end of 2021. Ireland is the second-largest base of Europe for international funds, with more than 4,000 billion euros in assets.
Some 5.07 billion euros of Russian assets are bonds issued by Mr Putin’s government, and another 5.88 billion euros are made up of shares, mainly in companies outside the financial sector, it said. -he declares.
Separately licensed Irish banks, mostly foreign lenders, had a combined financial asset and liability exposure of 1.7 billion euros to Russian counterparties in December, or 0.1% of the total. Most of the exposure consisted of loans to Russian companies.
Elsewhere, Irish insurance companies held 97 million euros in shares and bonds issued by Russian entities, or 0.1% of the total. Data from pension funds showed holdings of Russian assets of just 7 million euros, consisting mainly of government debt and portfolio equity securities. Irish households were recorded as holding €1m of shares in listed Russian companies.