The Bank of Italy has recently published guidelines on the role and duties of a servicer in securitization transactions in Italy.
The role of the servicer is to collect the receivables which are the subject of a securitization transaction, to maintain the deposit of the relevant funds if not immediately disbursed to the noteholders and to make the relevant payments. The servicer must be either a bank or a financial institution registered in the special register pursuant to the provisions of Article 107 of the Banking Act.
The Bank of Italy has stated that:
(i) sums deriving from the collections under the portfolios will have to be deposited on dedicated accounts of the special purpose vehicle (SPV) for the specific transaction and no confusion should be created between assets and funds of the vehicle and of other transactions;
(ii) in the execution of the transaction the interest of the noteholders should be protected and no conflict of interests should arise; and
(iii) collections should be made in compliance with the contemplated maturities.
In order to guarantee the above the Bank of Italy requires that the servicers must: (i) have technical and organizational structures able to monitor the various stages of each securitization transaction; (ii) have adequate assets in order to guarantee the performance of their functions; and (iii) inform the supervisory authority each time there is an irregularity in the performance of the transactions.
The Bank of Italy stresses that the vehicle should have adequate internal control systems and data processing/computer systems in order to be in a position to monitor at any time the aggregate of the transactions entered into in connection with each securitization.
In the performance of its duties, the functions of the servicer may use the services of other subjects provided that the servicer maintains control over the accuracy of the transactions within the scope of guaranteeing compliance with the regulations in the interest of the noteholders.
If a third party is appointed to support the activity of the servicer, such a party must transmit to the servicer on a timely basis the information necessary to allow the servicer to be updated on each portfolio and to permit the servicer to make inspections with such third party.
The services must assure the correct keeping of the accounting records and the adequacy of information and procedural flows which must allow the servicer to perform its duties with care and efficiency.
The minimum capital of the servicer should be at least of L1 billion ($440,000) but a servicer must have a patrimony for supervisory purposes of at least euro1 million ($853,000) if the securitization transactions for which they act as servicer have an aggregate value of euro100 million but do not exceed the aggregate value of euro500 million while their patrimony for supervisory purposes should be of at least euro1.5 million if the securitization transactions for which they act as servicer have an aggregate value of more than euro500 million.
Directors and internal auditors of the servicer must convene regular internal meetings with the purpose of verifying the performance of each transaction for which they act as servicer.
Compliance with the Bank of Italy's guidelines is relevant for the purposes of obtaining the authorization pursuant to the provisions of Article 129 of the Banking Act at the time of the placement of the securities issued by the vehicles.
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