Circular CSSF 25/899 is a CSSF circular, published 9 December 2025. Subject: Application of the Guidelines of the European Banking Authority on Acquisition, Development, and Construction (ADC) exposures to residential property under Article 126a of Regulation (EU) 575/2013 (EBA/GL/2025/03).
\nRelevant for: Credit institutions, Investment firms.
\nKeywords: Capital requirement, Credit risk, Real estate market, Risk management.
\nCircular CSSF 25/899 Application of the Guidelines of the European Banking Authority on Acquisition, Development, and Construction (ADC) exposures to residential property under Article 126a of Regulation (EU) 575/2013 (EBA/GL/2025/03)
\nCircular CSSF 25/899 Application of the Guidelines of the European Banking Authority on Acquisition, Development, and Construction (ADC) exposures to residential property under Article 126a of Regulation (EU) 575/2013 (EBA/GL/2025/03) To all credit institutions designated as Less Significant Institutions 1 under the Single Supervisory Mechanism and to all CRR investment firms incorporated under Luxembourg law.
\nLuxembourg, 9 December 2025 Ladies and Gentlemen, The purpose of this circular is to inform you that the CSSF, in its capacity as competent authority, applies the Guidelines (EBA/GL/2025/03) of the European Banking Authority (the “EBA”) on Acquisition, Development, and Construction (ADC) exposures to residential property under Article 126a of Regulation (EU) 575/2013 (the “Guidelines”), published on 27 June 2025. Consequently, the CSSF has integrated the Guidelines into its administrative practice and regulatory approach with a view to promoting supervisory convergence in this field at the European level.
\nThe Guidelines The Guidelines specify the credit risk-mitigating conditions that allow institutions to assign a risk weight of 100% instead of 150% for ADC exposures to residential property. They also address the specificities of institutions’ lending to public housing or not-for-profit entities. The Guidelines are attached to this circular and are available on the EBA’s website 2.
\nScope of application This circular shall apply to Less Significant Institutions and CRR investment firms incorporated under Luxembourg law.
\n1 “Significant supervised entities” as defined in Article 2, point 16 of Regulation (EU) No 468/2014 of the European Central Bank (ECB) of 16 April 2014 (the SSM Framework Regulation) shall refer to the relevant ECB rules. 2
\nEBA/GL/2025/03 - ADC Guidelines
\nAnnex
\nEBA Guidelines (EBA/GL/2025/03) on ADC exposures to residential property under Article 126a of Regulation (EU) 575/2013
\nEBA/GL/2025/03 27 June 2025
\nFinal Report Guidelines on ADC exposures to residential property under Article 126a of Regulation (EU) 575/2013
\nGUIDELINES ON ADC EXPOSURES TO RESIDENTIAL PROPERTY
\nContents Executive Summary
\nBackground and rationale
\nGuidelines
\nAccompanying documents
\nGUIDELINES ON ADC EXPOSURES TO RESIDENTIAL PROPERTY
\nExecutive Summary The EU implementation of the Basel III framework introduces in Article 4(1), point 79, of the Regulation (EU) 575/2013 (CRR) a new definition for a subset of exposures covering exposures related to Acquisition, Development, and Construction (ADC), which relate to exposures to corporates or special purpose entities (SPVs) financing any land acquisition for development and construction purposes, or financing development and construction of any residential or commercial immovable property. These ADC exposures are considered to be associated with heightened risk and consequently a specific risk weight of 150% is set out in Article 126a of the CRR. Notwithstanding institutions may apply a risk weight of 100% to ADC exposures to residential property provided that certain risk-mitigating conditions are met.
\nThe text above is the opening of the document; the PDF carries the whole.
\nDocument page, PDF. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.
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