The department "Supervision of Banks" is in charge of the prudential supervision of:
- credit institutions (status of universal bank) incorporated under Luxembourg law, including their branches established abroad;
- banks issuing mortgage bonds;
- branches of foreign banks having their registered office outside the EU;
- branches of banks originating from the EU pursuant to the European provisions relating to the single market in financial services;
- electronic money institutions;
- payment institutions;
- credit rating agencies.
The department ensures that the institutions comply with a certain number of standards laid down in legal and regulatory provisions, as well as with existing professional standards.
These standards are either quantitative or qualitative. The minimum capital requirement, the limitation of large risk exposure, the capital adequacy ratio, as well as the liquidity ratio are the most important quantitative standards. Professional experience and repute of managers, the quality of the shareholders and the transparent shareholding structure, the sound administrative and accounting organisation, adequate internal control procedures and an adequate risk management and monitoring system represent the main qualitative standards.
The CSSF's ongoing prudential supervision of banks consists of analysing the periodical financial information communicated by the banks, on-site inspections and the analysis of reports and evaluations transmitted by the réviseurs d'entreprises agréés (approved statutory auditors) and internal auditors. Moreover, the CSSF hosts meetings with banks on a regular basis.
The CSSF supervises banks having subsidiaries or financial participations in or outside Luxembourg on an individual as well as on a consolidated basis. As regards the latter, designed to assess the risk exposure of a banking or financial group, the banks concerned must transmit consolidated financial information and control reports of their subsidiaries to the CSSF.
Furthermore, the department deals with the methodology, monitoring and assistance related to risk management.