Circular CSSF 18/703 - Borrower-related residential real estate indicators

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Circular CSSF 18/703 - Borrower-related residential real estate indicators to be reported

21 February 2019

Regulatory News Alert

Last December, the Commission de Surveillance du Secteur Financier (CSSF) published Circular CSSF 18/703. Addressed to all lenders in residential real estate, the Circular introduced a macro-prudential, risk-monitoring framework for the residential real estate sector in Luxembourg. This framework implemented Recommendation ESRB/2016/14 of the European Systemic Risk Board on closing real estate data gaps (hereinafter referred to as the “Recommendation”).

Based on the Recommendation, the CSSF has since launched a requirement for semi-annual reporting of borrower-related residential real estate (RRE) indicators. The Circular provides detailed information on the indicators to be reported as well as on the template to be submitted.

The reporting scope is broadly defined. For example, data must be collected on all loans taken for purchasing residential real estate in Luxembourg and secured by real estate collateral located in Luxembourg. However, loans granted to a legal entity do not fall into the scope of CSSF 18/703 as they are considered as sufficiently covered by existing reports. Regarding the reporting process, the Circular specifies that data collection will take place semi-annually, with the reference dates set as 31 December and 30 June respectively.

Definitions and clarifications provided by the CSSF include, amongst others:

  • Borrower-based measures (e.g. LTV, LSTI, DSTI, LTI, DTI)
  • Variables contained in the indicators (loan, value, income, debt, etc.)
  • Bridge loans
  • Amount and number of exposures to be reported
  • Standards for transmission.

The Circular was enforced with effect on 17 December 2018. Thus, lenders must now ensure adequate data collection processes that are able to store and process relevant information on borrowers and able to produce the requested reports in time. The next reporting reference period will end on 30 June 2019, at which date a sufficient quantity of the required data must be collated.

How can Deloitte help?

Statistical reporting, with regard to borrower-related information, has significant synergies with other regulatory data topics. Therefore, a global approach towards enhanced data management is needed to ensure efficient risk data aggregation and reporting processes. By choosing Deloitte, you will receive tailor-made support from Risk Advisory experts and Technology Integration specialists who have extensive experience in prudential reporting and data architecture.

We trust this information is of assistance. Please feel free to contact us with any questions.

Contacts

Laurent Berliner
Partner – Risk Advisory Leader
Tel : +352 45145 2328
lberliner@deloitte.lu

Arnaud Duchesne
Director – Risk Advisory
Tel: +352 45145 4852
aduchesne@deloitte.lu

Jean Pierre Maissin
Partner – Technology Integration
Tel: +352 45145 2834
jpmaissin@deloitte.lu

Pascal Martino
Partner – Banking Leader
Tel: +352 45145 2119
pamartino@deloitte.lu

Bertrand Parfait
Director – Risk Advisory
Tel: +352 45145 2940
bparfait@deloitte.lu

Jean Philippe Peters
Partner – Risk Advisory
Tel: +352 45145 2276
jppeters@deloitte.lu

Simon Ramos
Partner – IM Advisory & Consulting
Leader
Tel: +352 45145 2702
siramos@deloitte.lu

Benoit Sauvage
Senior Manager – RegWatch, Strategy & Consulting
Tel: +352 45145 4220
bsauvage@deloitte.lu

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