Luxembourg: Regulatory clarification on loan origination activities

In brief

On 15 June 2021, the Commission de Surveillance du Secteur Financier (CSSF) published an updated version of its Q&A on the statuses of PFS-Part II with respect to the granting of loans to the public.


Contents

Key changes

  • The status of professional performing lending operations which consists of granting loans, for their own account, to the public, is governed by Article 28-4 of the law of 5 April 1993 on the financial sector, as amended (LFS) and requires a CSSF's authorization. However, the LFS does not provide a definition of the term "public."
  • In its update, the CSSF clarifies that a lending activity is not directed towards the public and does not fall within the scope of Article 28-4 of the LFS where the nominal value of the loan amounts to EUR 3 million at least (or the equivalent amount in another currency) and the loans are granted exclusively to professionals as defined in Article L. 010-1.2 of the Consumer Code.
  • It must be noted that a CSSF's authorization is also not required where loans are granted to a limited circle of persons who have been determined previously. The same applies where loans are granted through a Luxembourg special purpose vehicle (SPV) and granted to a limited circle of persons who have been determined previously by the entity that holds 100% of the SPV or controls it. 
  •  In all other cases, the CSSF indicates that they will carry out an assessment on a case-by-case basis.

This clarification is welcome by the credit fund sponsor community when they use Luxembourg SPVs for their lending activity.


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