Basel III finalisation: CRD VI and CRR III have been published
The Capital Requirements Directive (Directive 2013/36/EU), and the Capital Requirements Regulation (Regulation 2013/575/EU) and aiming to ensure resilience of the EU banking sector against economic shocks, have been amended to implement the final standards of Basel III.
Directive (EU) 2024/1619 of 31 May 2024 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks (“CRD VI”) and Regulation (EU) 2024/1623 of 31 May 2024 amending Regulation (EU) No. 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor (“CRR III”) have been published in the Official Journal of the European Union on 19 June 2024. They entered into force 20 days from their publication, i.e. 9 July 2024. Except for some of its provisions which apply from 9 July 2024, CRR III will apply from 1 January 2025. EU Member States will have until 11 January 2027, subject to certain exemptions, to transpose CRD VI.
Cross border banking services by third-country firms
Among this new package, one particular point of attention is the new rules CRD VI introduces with respect to the provision of cross-border banking services by third-country firms.
The cross-border provision of non-MiFID II banking services by third-country firms and the establishment of branches in the EU are mainly covered by Member States’ national rules. In Luxembourg, the law of 5 April 1993 and Circular 11/515 from the CSSF are relevant in this respect. Currently, if banking services are provided on a pure-cross border basis and do not involve physical presence in Luxembourg, they do not normally trigger the requirement to have a licence or establish a branch.
Harmonised authorisation requirements
CRD VI will introduce a new article 21c in the Capital Requirements Directive, making the provision of core banking services subject to harmonised authorisation requirements across the EU Member States. Core banking services for the purpose of article 21c are:
- taking deposits and other repayable funds,
- lending, and
- providing guarantees and commitments.
More specifically, third country firms seeking to provide such services in the EU, without acting through a subsidiary, will have to establish a branch in a Member State unless they fall within one of the narrow exemptions provided for in article 21c of CRD VI, such as:
- reverse solicitation,
- interbank operations, or
- intragroup operations.
The requirements laid down in this article 21c will not apply to contracts entered before 11 July 2026.
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