CSSF Regulation No 25-03 of 25 July 2025 Relating to the Activity of Issuing Covered Bonds

Issuing credit institutions must value physical collateral assets, including immovable and movable property, using prudent methods that exclude speculative elements and fees, with specific rules for renewable energy properties based on Estimated Realisation Value and Fair Value. The regulation mandates independent valuations, annual monitoring and revaluation cycles, and the use of statistical models subject to backtesting and plausibility checks. Derivative contracts may be included in the cover pool only if they hedge interest-rate or foreign-exchange risk, are governed by standardized agreements, and involve counterparties with a low risk of default. Institutions are also required to transmit information on covered bonds and publish data in accordance with the regulation's provisions.

CSSF Regulation No 25-03 of 25 July 2025

In case of discrepancies between the French and the English texts, the French text shall prevail. CSSF REGULATION NO 25-03 OF 25 JULY 2025 2/9 CSSF Regulation No 25-03 of 25 July 2025 relating to the activity of issuing covered bonds. (Mém. A 2025, No 344) The Executive Board of the Commission de Surveillance du Secteur Financier, Having regard to Article 129(2) of the Constitution; Having regard to the Law of 23 December 1998 establishing a financial sector supervisory commission (“Commission de surveillance du secteur financier”), and in particular Article 9(2) thereof; Having regard to the Law of 5 April 1993 on the financial sector, and in particular Articles 12-1 and 12-2 thereof; Having regard to the Law of 8 December 2021 relating to the issue of covered bonds, and in particular Articles 6, 7, 8, 9 and 16 thereof; Having regard to the Law of 20 December 2024 amending the Law of 8 December 2021 relating to the issue of covered bonds; Having regard to Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012; Having regard to Directive 2013/36/EU of the European Parliament and the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC; Having regard to Directive (EU) 2019/2162 of the European Parliament and of the Council of 27 November 2019 on the issue of covered bonds and covered bond public supervision and amending Directives 2009/65/EC and 2014/59/EU; Having regard to Regulation (EU) 2019/2160 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) No 575/2013 as regards exposures in the form of covered bonds; Having regard to Regulation (EU) 2024/1623 of the European Parliament and of the Council of 31 May 2024 amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor; Having regard to the opinion of the Consultative Committee for Prudential Regulation; Decides:
Chapter I
Definitions and scope of application
Article 1 – Definitions

For the purposes of this regulation, the following definitions shall apply:

“LFS” shall mean the Law of 5 April 1993 on the financial sector, as amended;
“Law” shall mean the Law of 8 December 2021 relating to the issue of covered bonds, as amended;
“issuing credit institution” shall mean an institution as defined in Article 1, point 15°, of the Law;
“EBA” shall mean the European Banking Authority established by Regulation (EU) No 1093/2010 of
the European Parliament and of the Council of 24 November 2010;
“renewable energy” shall mean any energy produced as defined in Article 1, point 12°, of the Law;
“renewable energy property” shall mean any renewable energy property as defined in Article 1, point
6°, of the Law;
“FV” shall mean the fair value as defined in IFRS 13 “Fair Value Measurement” published by the
International Accounting Standards Board and adopted by the European Union;
“ERV” or “Estimated Realisation Value” shall mean the estimated realisation value of a renewable
energy property as specified in Article 8(2) of the Law, which takes into consideration the sustainable aspects and revenue of the renewable energy property. Where the discounted cash flows (DCF)

CSSF Regulation No 25-03 of 25 July 2025 Relating to the Activity of Issuing Covered Bonds

Lineage: In force