The Law dated 27 June 2013 relating to the banks issuing mortgage bonds and amending the Law of 5 April 1993 on the financial sector, has been published in the Luxembourg Official Journal on 1st July 20131.

Mortgage banks are credit institutions having as their main object the granting of loans secured by rights on immoveable property, bonds or similar debt instruments, commitments from public entities (as specified by the Law of 5 April 1993), and the issuing on that basis of debt instruments secured by those rights or charges, such instruments being known as mortgage bonds.

The regulation on mortgage banks as amended by the Law dated 27 June 2013 is improved with regard to the liquidation / “sursis de paiement” process applicable to mortgage banks, in a view to protect the interests of holders of mortgage bonds, and by the insertion of a new type of mortgage bonds, namely mutual mortgage bonds, which are:

  • loans granted to credit institutions (participating in a deposit-guarantee scheme) established in EU, EEE, or OCDE countries and the issue of mortgage bonds guaranteed by the receivables resulting from the loans; or,
  • loans granted by a mortgage bank and guaranteed by bonds issued by credit institutions, the mortgage bank issuing mortgage bonds guaranteed by the receivables resulting from the loans.

This Law has entered into force on 4 July 2013.