The new provisions will apply from April 16, 2026, with Banca d’Italia and Consob required to adopt implementing measures by October 16, 2026.
The main innovations include: liberalization of EU credit alternative investment funds (AIFs), the opening to consumer lending, new differentiated leverage limits, the risk retention obligation, and the expansion of activities permitted for AIFMs.
Summary of the main innovations
- New definition of “credit AIF”: this encompasses funds that originate loans directly or acquire loans on the secondary market, excluding funds that acquire loans on an occasional or ancillary basis.
- Liberalization for EU credit AIFs.
- Introduction of new limits applicable to credit AIFs (including leverage limits and exposure limits).
- Risk retention obligation and prohibition of originate-to-distribute strategies for credit AIFs.
- Opening to consumer lending.
- Expansion of AIFM activities.
New definition of credit AIF
The Decree introduces, for the first time, a harmonized definition of “credit AIF” (“loan-originating AIF” under AIFMD2), identifying as such an AIF that: (i) has an investment strategy primarily consisting of investing in loans; or (ii) holds loans in its portfolio with a notional value representing at least 50% of its net asset value.
The notion of “investment in loans” is broadly defined. In particular, in the Italian transposition of AIFMD2 (which refers solely to “loan origination”), this concept encompasses the granting of financing “in any form,”, including the purchase of loans, carried out directly by the AIF or indirectly through special purpose vehicles, where the AIFM or the AIF participates in the structuring of the loan.
In practical terms, this means that private credit structures using special purpose vehicles (SPVs) for the disbursement of financing expressly fall within the scope of the AIFMD2 framework, provided that the AIFM or the AIF participates in the structuring of the loan.
EU AIFs investing in loans in Italy
The Decree simplifies the regime applicable to EU credit AIFs intending to invest in loans in Italy. Under the previous regime, such AIFs were required to make a prior notification to Banca d’Italia, which triggered a procedure that was a de facto authorization procedure, under which the authority could prohibit the commencement of operations if the EU credit AIF did not meet specific requirements. The new regime eliminates this implicit authorization procedure. AIFMs are now only required to notify Banca d’Italia at the commencement of operations.
New limits for credit AIFs
Leverage limit
Differentiated leverage limits are introduced: up to 175% for open-ended AIFs and up to 300% for closed-ended AIFs. Both thresholds are higher than the 150% limit provided under the previous Italian regulatory framework. The increase represents an opportunity to structure transactions with greater recourse to leverage compared to the previous regime, with the distinction between open-ended and closed-ended AIFs assuming strategic relevance during the fund structuring phase.
Exposure limit for financial counterparties
AIFMD2 imposes a limit of 20% of the AIF’s capital when the borrower is a financial institution or another AIF (to be satisfied after an initial ramp-up period).
This provision, aimed at containing the risk of systemic interconnection, is not expressly transposed in the Decree, and it is reasonable to expect that the limit will be introduced through secondary-level regulatory measures by Banca d’Italia.
The application of this limit—if applied literally—raises significant concerns for the Italian market, particularly with regard to real estate lending, where a significant portion of transactions involve Italian real estate AIFs as borrowers. In light of the rationale underlying the provision, which is aimed at preventing systemic risks arising from the interconnection between financial intermediaries, a more targeted interpretation of its scope of application would be desirable, excluding from its scope those real estate AIFs that—like a real estate corporate vehicle—have as their sole purpose the holding of real estate and do not undertake further financial activities, thereby ruling out any systemic risk at the outset.
Prohibition of the originate-to-distribute strategy and risk retention obligation
The establishment of credit AIFs whose strategy consists of investing in loans with the sole purpose of transferring or assigning them to third parties (the so-called originate-to-distribute strategy) is prohibited.
Where part of the portfolio loans is transferred or assigned to third parties, the AIF is required to retain at least 5% of the notional value of the transferred loans (risk retention). These provisions are intended to prevent moral hazard phenomena.
Form of credit AIFs: introduction of the open-ended (or semi-open ended) form subject to certain conditions
The Decree allows the establishment of Italian credit AIFs in open-ended (or semi-open ended) form, provided that the AIFM demonstrates to the competent supervisory authority (in Italy, Banca d’Italia) the compatibility of the liquidity risk management system with the investment strategy and redemption policy of the AIF.
For open-ended AIFs, AIFMs must select at least two liquidity management tools from those provided under AIFMD2 (such as, for example, redemption gates, redemption fees, anti-dilution levies, and side pockets).
Opening to consumer lending
One of the most significant innovations of the Decree concerns the removal of the prohibition on credit AIFs granting loans to consumers.
AIFMD2 allowed member states to maintain such a restriction, but Italy has chosen an approach of fully opening the consumer credit market to non-bank operators. The declared objective is to diversify the credit offering, increase available liquidity, and potentially reduce costs for consumers.
This opening is of particular practical relevance for credit AIF managers. On the one hand, it opens a new market segment previously closed to non-bank operators, enabling credit AIFs to diversify their investment strategies and access a significantly broader pool of borrowers. On the other hand, AIFMs intending to operate in this segment will need to develop specific competencies in consumer creditworthiness assessment and ensure compliance with consumer protection regulations, including the provisions of the Italian Banking Law.
Expansion of activities available to AIFMs
The Decree significantly expands the range of activities that AIFMs may carry out, including:
i. the granting of financing on behalf of the managed AIFs;
ii. credit management in respect of the managed AIFs and the provision of credit servicing activities;
iii. services for securitization special purpose vehicles;
iv. the administration of benchmarks;
v. the provision to third parties of functions or activities already performed by the AIFM in relation to the managed AIFs, provided that potential conflicts of interest are adequately managed.
From a practical standpoint, this expansion marks a significant evolution of the business model of Italian AIFMs, enabling them to operate as specialized service providers for other market operators (for example, credit analysis, asset valuation, and portfolio monitoring) and to position themselves as potential servicers in the NPL and securitization markets.
Transitional regime
The Decree does not contain specific provisions on the transitional regime in line with AIFMD2; the latter, by contrast, provides for an articulated grandfathering system distinguishing between different situations, summarized below.
(a) Credit AIFs already existing as of April 15, 2024 that have not raised new capital: The new rules on risk retention, the originate-to-distribute prohibition, leverage limits, and the exposure limit do not apply as long as the credit AIF does not accept new investor commitments for the origination of new loans.
(b) Credit AIFs already existing as of April 15, 2024 that have accepted new commitments after that date: The provisions on risk retention, the originate-to-distribute prohibition, leverage limits, and the exposure limit apply only to new loans originated against the new commitments. Such credit AIFs must comply with the concentration and leverage limits by April 16, 2029.
(c) Credit AIFs established after April 15, 2024 and before April 16, 2026: All the new provisions apply in full from April 16, 2026. A ramp-up period applies exclusively for the 20% exposure limit to individual borrowers in the financial sector. This limit applies from the later of: (i) the date specified in the credit AIF’s rules or prospectus, which may not be later than 24 months from the first closing; and (ii) April 16, 2026. AIFMD2 further provides that, in exceptional circumstances, the competent authorities of the AIFM may approve an extension of such ramp-up period of up to an additional 12 months, upon submission of a duly justified plan.
(d) Credit AIFs established from April 16, 2026: Credit AIFs established from April 16, 2026 are fully subject to the new rules from their establishment, without benefiting from any transitional regime (subject to the ramp-up period of 24 months from the first closing for compliance with the 20% exposure limit to financial sector borrowers). Also in this case, AIFMD2 allows for an extension of the ramp-up period of up to an additional 12 months, subject to agreement with the competent supervisory authorities, in exceptional circumstances and on the basis of a duly justified plan.
The absence of express transitional provisions in the Decree raises some questions regarding the manner in which the European grandfathering regime will be applied. However, it is reasonable to consider that the transitional regime (which is, in itself, sufficiently specific and detailed) provided by AIFMD2 will automatically apply to Italian credit AIFs.
Concluding remarks
The Decree redefines the regulatory landscape of credit AIFs in Italy at a time of rapid growth in the European private credit market, whose assets under management are expected to increase significantly in the coming years, in line with the broader Capital Markets Union strategy aimed at diversifying sources of financing for the real economy.
In this context, Italy has positioned itself among the most open member states. While other European jurisdictions (including Germany, Luxembourg, Ireland, and France) have exercised or intend to exercise the option to prohibit consumer lending by AIFs within their territory, the Italian legislator has opted for full market access, seeking to diversify credit sources in the retail segment as well.
On the cross-border front, the Decree replaces the previous regime — under which a prior notification to Banca d’Italia effectively operated as an implicit authorization procedure — with a straightforward notification obligation at the commencement of operations. It should be noted, however, that AIFMD2 does not create a true “lending passport” for AIFs: passporting rights continue to attach to the AIFMs, not to the funds themselves.
Significant interpretive and practical questions remain open, and it will be essential to monitor the evolution of the implementing measures that Banca d’Italia and Consob adopt in the coming months (expected by October 16, 2026), assessing their operational impacts and any practical concerns.
