to implement Macro-Prudential Instruments)

L.N. 314 of 2022

CENTRAL BANK OF MALTA ACT

(CAP. 204)

Central Bank of Malta Act (Appointment of Designate Authority

to implement Macro-Prudential Instruments)

(Amendment) Regulations, 2022

IN EXERCISE of the powers conferred by article 60(2) of the

Central Bank of Malta Act, the Minister responsible for finance, after

consultation with the Central Bank of Malta has made the following

regulations:-

The title of these regulations is the Central Bank of Malta

Act (Appointment of Designate Authority to implement Macro-

Prudential Instruments) (Amendment) Regulations, 2022 and they

shall be read and construed as one with the Central Bank of Malta Act

(Appointment of Designate Authority to implement Macro-Prudential

Instruments) Regulations, hereinafter referred to as "the principal

regulations".

Sub-regulation (2) of regulation 1 of the principal

regulations shall be substituted by the following new sub-regulation

"(2) The scope of these regulations is to transpose the

provisions of Directive (EU) 2019/878 of the European

Parliament and of the Council of 20 May 2019 amending

Directive 2013/36/EU as regards exempted entities, financial

holding companies, mixed financial holding companies,

remuneration, supervisory measures and powers and capital

conservation measures, hereinafter referred to as "the Directive",

and to implement the provisions of Regulation (EU) 2019/876 of

the European Parliament and of the Council of 20 May 2019

amending Regulation (EU) No 575/2013 as regards the leverage

ratio, the net stable funding ratio, requirements for own funds

and eligible liabilities, counterparty credit risk, market risk,

exposures to central counterparties, exposures to collective

investment undertakings, large exposures, reporting and

disclosure requirements, and Regulation (EU) No 648/2012,

hereinafter referred to as "the Regulation".".

Regulation 2 of the principal regulations shall be amended

as follows

(a)

in sub-regulations (1), (2) and (3) thereof, the words

"Minister for Finance" shall be substituted by the words

"Minister responsible for finance"; and

(b) immediately after sub-regulation (3) thereof there

shall be added the following new sub-regulations

"(4) The Minister responsible for finance hereby

appoints the Central Bank of Malta, which shall act

jointly with the competent authority, as the designate

authority for the purposes of Article 124(1a) of the

Regulation to periodically, and at least annually, assess

whether the risk weight referred to in Articles 125(2) or

126(2) of the Regulation adequately reflect the actual

risks related to exposures to one or more property

segments fully secured by mortgages on residential

property or on commercial immovable property located

in Malta in accordance with Article 124 of the

Regulation and where such risk weight is deemed not

appropriate, the Central Bank of Malta, jointly with the

competent authority, may set the risk weights in

accordance with the following ranges

(a) thirty-five per cent (35%) to one

hundred and fifty per cent (150%) for exposures

secured by mortgages on residential property; and

(b) fifty per cent (50%) to one hundred and

fifty per cent (150%) for exposures secured by

mortgages on commercial immovable property.

(5) The Minister responsible for finance hereby

appoints the Central Bank of Malta, which shall act

jointly with the competent authority, as the designate

authority for the purposes of Article 164(5) of the

Regulation to periodically, and at least annually, assess

whether the minimum Loss Given Default (LGD) values,

as referred to in Article 164(4) of the Regulation, are

appropriate for exposures secured by mortgages on

residential property and for commercial immovable

property located in Malta, and set higher minimum LGD

values for those exposures if these are assessed to be

inadequate, and if their inadequacy could adversely

affect current or future financial stability in Malta. The

said higher minimum LGD values may also be applied at

the level of one or more property segments of such

exposures.".

€0.27