CRD6: Four-month countdown to finalise plans for lending into the EU

On 11 January 2027 new rules will take effect restricting who can provide banking services into the EU from overseas. International financial institutions have limited options for continuing to service EU clients after this date. After more than two years of transition, banks and other firms based outside the EU now have approximately four months to lock in their compliance strategy.

Amendments to the EU’s Capital Requirements Directive, known as CRD6, make important changes to the rules on cross-border services. Notably, Article 21c introduces additional licensing restrictions on the ability of entities outside the EU to provide certain banking services to EU clients. Although CRD6 was made law in 2024, transitional provisions mean that the effect of this requirement has been delayed until 11 January 2027.

Article 21c CRD6 requires non-EU entities to establish branches to provide certain banking services in EU Member States, except where an exemption applies such as reverse solicitation. The banking services which trigger the requirement are (i) deposit-taking, (ii) lending, and (iii) guarantees and commitments. For both (ii) and (iii), the branch requirement is only triggered if the entity would qualify as a credit institution or Class 1 investment firm if it were established in the EU.

The introduction of this restriction effectively leaves firms providing these in-scope banking services into the EU with four options for compliance:

1. Continue to provide services into the EU by relying on exemptions under CRD6 (although these are drafted narrowly);
2. Move relevant services to a non-EU lending vehicle which does not trigger the branch requirement (although this does not help in Member States that already regulate wholesale lending);
3. Move in-scope banking services to a new or existing EU subsidiary (although doing so is onerous and time-consuming); or
4. Establish a branch in each jurisdiction in which the in-scope banking services are provided (although this is also not a quick fix).

Article 21c includes a provision protecting clients’ acquired rights under contracts that were entered into before 11 July 2026. New contracts since this date will not benefit from this transition relief and pre-existing contracts may lose it when significant lifecycle events or amendments take place.

As a Directive, CRD6 needs to be transposed into the national law of every EU Member State. Despite the relevant deadline already having passed, not all Member States have completed transposition, which complicates firms’ compliance projects.

We have worked with a wide range of firms to assess the impact of CRD6 on cross-border banking services, determine whether structural reforms are required and update contracts where necessary. Get in touch with us if you would like to benchmark your firm’s CRD6 readiness.