Regulatory Alerts2018-12-19
Added · Updated
Circular CSSF 18/707: Minimum Requirements for Mortgage Bond Issuers
This circular establishes minimum requirements for the management and control of the covered bond register, collateral, and the limit of covered bonds in circulation, applying to banks issuing covered bonds and their special approved statutory auditor. It mandates that entries in the covered bond register cannot be reversed without prior written approval from the auditor and requires immediate reporting to the CSSF of any breach of prudential limits. The document specifies that replacement collateral may not exceed 20 percent of the nominal value of outstanding covered bonds, while total coverage must maintain a nominal, interest, and present value ratio of at least 102 percent. Additionally, banks must ensure liquidity coverage for the next 180 days, and the special auditor must submit an annual report to the CSSF within one month after the bank's ordinary general meeting.
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