CENTRAL BANK OF MALTA ACT (APPOINTMENT OF DESIGNATE AUTHORITY TO IMPLEMENT MACRO-PRUDENTIAL INSTRUMENTS)

CENTRAL BANK OF MALTA ACT (APPOINTMENT

OF DESIGNATE AUTHORITY TO IMPLEMENT

MACRO-PRUDENTIAL INSTRUMENTS)

SUBSIDIARY LEGISLATION 204.06

CENTRAL BANK OF MALTA ACT (APPOINTMENT

OF DESIGNATE AUTHORITY TO IMPLEMENT

MACRO-PRUDENTIAL INSTRUMENTS)

REGULATIONS

31st December, 2013 *

LEGAL NOTICE 29 of 2014, as amended by Legal Notices 314 of 2022

230 of 2024 and 278 of 2025.

(1) The title of these regulations is the Central Bank of

Malta (Appointment of Designate Authority to implement Macro-

Prudential Instruments) Regulations.

(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".

(1) The Minister responsible for finance hereby appoints the

Central Bank of Malta as the Designate Authority for the purposes

of Article 133(3) of the Directive to set the systemic risk buffer and

identify the sets of institutions to which it applies and for the

purposes of Article 136(1) of the Directive to set the counter-

cyclical buffer rate for Malta.

(2) 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

131(1) of the Directive to identify, on a consolidated basis, global

systemically important institutions (G-SIIs), and, on an individual,

sub-consolidated or consolidated basis, as applicable, other

systemically important institutions (O-SIIs), which have been

authorised within Malta.

(3) The Minister responsible for finance hereby appoints the

Central Bank of Malta as the Designate Authority for the purposes

of Article 458(1) of the Regulation to identify changes in the

intensity of macro-prudential or systemic risk in the financial

system with the potential to have serious negative consequences to

the financial system and the real economy in Malta and which that

authority considers would better be addressed by means of stricter

national measures, to draft national measures for domestically

authorised institutions, or a subset of those institutions, intended to

*see regulation 1(3) of these Regulations as originally promulgated.

CENTRAL BANK OF MALTA ACT (APPOINTMENT

OF DESIGNATE AUTHORITY TO IMPLEMENT

MACRO-PRUDENTIAL INSTRUMENTS)

mitigate the changes in the intensity of risk and concerning the

level of own funds laid down in Article 92 of the Regulation, the

requirements for large exposures laid down in Article 392 and

Articles 395 to 403 of the Regulation, the public disclosure

requirements laid down in Articles 431 to 455 of the Regulation,

the level of the capital conservation buffer laid down in Article 129

of the Directive, liquidity requirements laid down in Part Six of the

R e gu la ti on , r i s k w e ig h ts f or t a rg e ti n g a s s e t b u bb le s i n t he

residential and commercial property sector, or intra financial sector

exposures, and to be in charge of the application of Article 458 of

the 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.

(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 m ay 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.

CENTRAL BANK OF MALTA ACT (APPOINTMENT

OF DESIGNATE AUTHORITY TO IMPLEMENT

MACRO-PRUDENTIAL INSTRUMENTS)

(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.

Words and expressions used in these regulations shall have the

same meaning as assigned to them in the Central Bank of Malta Act

and in the Regulation.