Strictly speaking – a bankruptcy-remote special purpose entity: a subsidiary or affiliate institution whose asset-liabilitystructure and legal status makes its obligations secure even if its parent company or guarantor goes bankrupt), – which is designed to be permanent (conduit = a stable tube or duct for carrying and shielding electrical wires or cables; insulating tube, cable sheathing) and – serves to tranch the asset-backed securities – brought into a pool by an originating bank or several originators – and – to place them on the market as securitized securities. As a rule, however, special purpose entities and conduits are equated. – If receivables of several sellers of receivables are bundled in a conduit, this is sometimes also referred to as a multi-seller conduit. – Conduits are regularly established and held abroad in order to avoid German trade tax. – See activity-shifting, on-balance-sheet, investment vehicles, back-to-originator postulate, banking regulation paradox, credit enhancement single-originator securitization, loan commitments, irrevocable, originate-to-distribute strategy, kickback effect, single master liquidity conduit, nesting company, shadow banking, voting rights criterion, subprime crisis, support, tacit, securitization paper retention, securitization structure, special purpose vehicle consolidation.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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