implement Macro-Prudential Instruments)

L.N. 278 of 2025

CENTRAL BANK OF MALTA ACT

(CAP. 204)

Central Bank of Malta (Appointment of Designate Authority to

implement Macro-Prudential Instruments)

(Amendment) Regulations, 2025

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

(Appointment of Designate Authority to implement Macro-Prudential

Instruments) (Amendment) Regulations, 2025 and these regulations

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

(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) 2024/1619 of the European

Parliament and of the Council of 31 May 2024 amending

Directive 2013/36/EU as regards supervisory powers, sanctions,

third-country branches, and environmental, social and

governance risks, hereinafter referred to as "the Directive", and

to implement the provisions of 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, hereinafter referred to as "the

Regulation".".

Regulation 2 of the principal regulations shall be amended

as follows

(a) sub-regulation (4) thereof shall be substituted by the

following new sub-regulation

"(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(8) of the Regulation to

periodically, and at least annually, assess whether the risk

weights laid down in Articles 125 and 126 of the

Regulation for exposures secured by immovable property

located in the territory of Malta are appropriately based on

(a) the loss experience of exposures secured

by immovable property; and

(b) forward-looking

immovable

property

markets developments.";

(b) immediately after sub-regulation (4) thereof there

shall be added the following new sub-regulations

"(4a) Where on the basis of the assessment referred

to in sub-regulation (4), the Central Bank of Malta, acting

jointly with the competent authority, concludes that the risk

weights established in Article 125 or 126 of the Regulation

do not adequately reflect the actual risks related to

exposures to one or more property segments secured by

mortgages on residential property or on commercial

immovable property located in one or more parts of the

territory of Malta, and if it considers that the inadequacy of

the risk weights could adversely affect the current or future

financial stability of Malta, it may increase the risk weights

applicable to those exposures or impose stricter criteria

than those established in Article 124 of the Regulation.

(4b) The Central Bank of Malta, acting jointly with

the competent authority, shall not increase the risk weights

to more than one hundred and fifty per cent (150%) as

established in Article 124(9) of the Regulation.

(4c) The Central Bank of Malta, acting jointly with

the competent authority, may reduce the percentages of the

property value referred to in Article 125(1) or in Article

126(1) of the Regulation, or the exposure-to-value (ETV)

percentages that define the ETV risk weight bucket

established in Article 125(2) or in Article 126(2) of the

Regulation. The Central Bank of Malta, acting jointly with

the competent authority, shall ensure consistency across all

ETV risk weight buckets, such that the risk weight of a

lower ETV risk weight bucket is always lower or equal to

the risk weight of an upper ETV risk weight bucket.";

(c)

sub-regulation (5) thereof shall be substituted by the

following new sub-regulation

"(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(6) 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

retail exposures secured by residential property or other

retail exposures secured with residential or commercial

immovable property located in one or more parts of the

territory of 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.".

Immediately after regulation 2, as amended, there shall be

added the following new regulation

3. Words and expressions used in these

"Interpretation.

regulations shall have the same meaning as assigned to

them in the Central Bank of Malta Act and in the

Regulation.".

€0.27