New EU rules for banks from third countries | Börsen-Zeitung

On 9 July 2024, Directive (EU) 2024/1619 amending the Capital Requirements Directive (CRD) came into force (known as CRD VI). It requires member states to reform national law within 18 months so that third-country banks are no longer allowed to provide core banking services across EU borders, but only through branches or subsidiaries.

The ban affects the investment, lending and guarantee industry. What is left out – from the point of view of CRD VI – is the provision of such services as ancillary services (eg deposits and loans to order financial securities), intra-bank business, reverse claim situations and transactions with (some) existing customers who were previously considered customers. July 11, 2026 was won. The new CRD itself also provides that other companies in the financial sector will be exempt from the ban if necessary. The ESAs are expected to prepare a report on this before the middle of next year.

The cross-border provision of such services has so far been permitted within the scope of the exemption under Section 2 Paragraph 5 of the Banking Act (KWG), provided that the institution does not require additional guidance by BaFin for its business activities in Germany. .

Swiss institutions also get direct access to the German private consumer market – as part of the so-called simplified exemption; In addition, the exemption allows third-country banks to have direct access to professional customers, in particular eligible partners, and, through German institutions, also indirect access to private purchase.

Therefore, BaFin lists several institutions on its website that are currently using the exemption. In particular, the extent to which the institutions are affected depends on the content and scope of the exemption provided, especially the services covered.

In BaFin’s view, the current exemptions for the cross-border provision of investment, loan and guarantee transactions may not be maintained in the future. This also applies to the simplified exemption for Swiss banks. In the past, exemptions were only granted subject to revocation. It is therefore usually possible to adapt the administrative functions to a changed legal situation at the expense of the institution (Section 49 VwVfG). Based on the draft bill for the CRD VI Implementation Act, it is expected that exemptions for banking services that are to be provided outside relevant exceptions will be revoked by BaFin in the future.

In order to determine whether and to what extent an existing exemption will be revoked, BaFin is now requesting additional information from the affected institutions. With the implementation of CRD VI, new criteria will become relevant for the eligibility of the exemption, which did not have to be presented before. The details of the requirements that will apply to Germany in the future have not been clarified in the end. It is not clear, for example, whether the German legislature intends to limit the broader term of ancillary services in CRD VI to ancillary security services only in accordance with MiFID II as part of the implementation in Germany. Then, for example, the investment business would not be available.

Institutions now have the opportunity to present their business model and the way services will be provided (in the future) to BaFin at an early stage. The key question here is, among other things, whether and how the investment, lending and guarantee industry will be linked to securities transactions, investment advice and/or portfolio management in the future.

If the exemption is revoked, core banking services can in future only be provided through an approved branch or subsidiary in the EU. CRD VI includes minimum uniform requirements for branches. Until now, regulation was controlled by national law, in Germany Section 53 KWG.

In the future, CRD VI will distinguish between two classes: Class 1 includes, among other things, branches with more than 5 billion euros in assets and liabilities and branches that receive a lot of private deposits of customers. The content and scope of the regulatory requirements depend on the assignment to one of the classes. In addition, conversion to a subsidiary (with independent approval) may be ordered, especially in the case of systemically important branches.

Therefore CRD VI severely limits access to third country institutions and raises it to a uniform (higher) level of regulation within the EU. BaFin’s administrative practice of exemptions is facing change (again).