European Network | Third Country Regime under CRD 6

In December 2023, the Council confirmed the final compromise reached in the trilogue negotiations between the Council, the European Commission and the European Parliament (“EP”) regarding a new amendment of the Capital Requirements Directive (“CRD 6”). This reform package is now in the final stages of the legislative procedure and will likely be adopted by the EP in early 2024.

Amongst other aspects, CRD 6 introduces a new regulatory framework for market access by third-country undertakings which intend to offer banking services to clients located in EU Member States (“MS”). This third country regime (“TC Regime”) restricts the ability of third-country (non-EU) undertakings to offer cross-border banking business EU clients, except when undertaken on a reverse solicitation basis. The TC Regime also harmonises the way in which MS regulate third-country undertakings conducting banking business through branches in the EU (“TCB”). As such, the TC Regime may have a significant impact on the ability of many non-EU banks to continue to deal with EU clients or counterparties on a cross-border basis in reliance on existing MS regimes.

The purpose of this joint paper is to give an overview of the current EU regulatory framework, the TC Regime under CRD 6 as well as the national implementation and impact.