CRD Third Country

CRD VI, Directive EU 2024/1619, introduces the first EU-wide harmonised regime for third country branches. From 11 January 2027, non-EU banks may only provide core banking services -- lending, guarantees, deposit-taking -- in the EU through a licensed branch or subsidiary in the relevant Member State. Purely cross-border provision of these services without physical presence will be prohibited. In Germany, this regime is transposed through the BRUBEG into the German Banking Act, the KWG. The regulation affects all credit institutions headquartered outside the EEA that serve EU clients.

CRD VI introduces a risk-based classification system. Class 1 branches include institutions with total assets of EUR 5 billion or more, significant retail deposits, or branches headquartered in jurisdictions without an equivalence determination. They face stricter capital, liquidity and organisational requirements. Class 2 branches fall below these thresholds and are subject to less stringent requirements. The classification determines the scope of supervisory obligations, from minimum capital and liquidity buffers to governance requirements and reporting duties under EBA Framework 4.3.

Existing branches of third country institutions in Germany must complete a re-licensing process with BaFin by 10 January 2027. This aligns existing licences with the new CRD VI requirements. Simultaneously, certain exemptions from licensing requirements for purely cross-border activities will be revoked. Grandfathering protection applies to existing contractual relationships until July 2026. Institutions should initiate the process early, as BaFin requires extensive documentation on business plans, governance, capital adequacy and internal control systems.

CRD VI provides several exemptions. The reverse solicitation exemption under Article 21c allows business conducted exclusively at the initiative of the EU client, subject to strict limitations and documentation requirements. The interbank and group exemption covers transactions between professional counterparties and intra-group transactions. Exemptions under Section 2 paragraph 5 KWG may continue to apply for certain activities. Additionally, MiFID II-regulated investment services remain exempt from the CRD branch requirement where covered by MiFID third country firm provisions.

ADVISORI guides third country institutions through the entire CRD VI implementation process. We start with a gap analysis comparing your existing structures against the new requirements. We then determine your risk classification, plan capital and liquidity requirements, and create an implementation roadmap with clear milestones toward the re-licensing deadline. We support building the required governance structures, prepare the regulatory application documents and guide you through the re-licensing process. Based in Frankfurt, we operate in direct proximity to BaFin, the ECB and major international banks.

The equivalence assessment is a central element of the CRD VI third country regime. The European Commission evaluates whether a third country supervisory regime is equivalent to EU standards. A positive equivalence determination may allow branches from that jurisdiction to benefit from simplified requirements, Class 2 rather than Class 1. Without an equivalence determination, the branch is automatically classified as Class 1, triggering higher capital, liquidity and governance requirements. For post-Brexit branches from the United Kingdom, the equivalence question is particularly relevant, as no comprehensive equivalence determination has been issued for the UK to date.

CRD VI required transposition into national law by 11 January 2026. In Germany, this was achieved through the BRUBEG, passed by the Bundestag on 29 January 2026. The new requirements for third country branch authorisation apply from 11 January 2027. The re-licensing process for existing branches must be completed by that date. Grandfathering protection for existing contracts applies until July 2026. Institutions should use the remaining transition period to adapt their structures and initiate the regulatory application process.