On 10 July 2026, the Minister for Finance signed the European Union (Capital Requirements) (Amendment) Regulations 2026 (S.I. No. 326 of 2026) which transpose into Irish law Directive (EU) 2024/1619 (“CRD VI”).

The new regime governs the terms on which non-EU credit institutions may lend into, and take deposits from, the Irish market.

EU-headquartered credit institutions that operate through branches located outside the European Union — and that lend to the aviation and asset finance sectors through Ireland — will wish to understand whether, and to what extent, the new regime affects them. This update summarises the position.

Background

A central feature of CRD VI, and of the Irish transposing legislation, is the introduction of a harmonised framework governing the establishment and supervision of branches in the European Union by undertakings whose head office is located outside the EU (“TCU”).

Briefly, credit institutions with their HQ outside the EU cannot lend into EU customers without being authorised to do so in the EU member state in which the customer is based.

Aviation and Asset Finance

Ireland is a premier jurisdiction for aviation SPVs, managing over 60% of the world’s leased aircraft. It owes its global dominance to the tax-neutral Section 110 special purpose regime, a significant double-tax treaty network, a creditor-friendly common law system, and a deep pool of specialised legal and financial professionals.

Ireland is not just renowned globally for its aviation industry but for all forms of asset finance, from rail to ship financing as well as property investments using SPVs, ICAVs and Irish Limited Partnerships.

Many EU credit institutions provide finance to the aviation and asset finance sectors through the use of Irish SPVs.

A question that naturally arises for EU-headquartered banking groups is whether the new regime applies where it lends to an Irish-connected customer through a branch that the institution maintains outside the EU (for example, a branch in a third country such as Singapore, Hong Kong, the United States or the United Kingdom).

EU Credit Institutions Lending Through Non-EU Branches

Put another way: does the fact that the lending activity is booked through, or carried out from, a non-EU branch of an EU bank bring that lending within the scope of the third-country branch authorisation requirement under CRD VI?

In our view, the answer is no.

EU-headquartered credit institutions lending to Irish entities through their own non-EU branches are not caught by the new authorisation requirement. The key elements of the analysis are as follows.

Location of the “head office”

A “third-country branch” is defined by reference to a branch established in the State by an undertaking (or credit institution) which “has its head office in a third-country”. The requirement for the regime is therefore the location of the undertaking’s head office, not the location of the particular branch through which a given piece of business happens to be transacted.

Undertakings established in a third-country

The authorisation requirement is expressed to apply to “an undertaking established in a third-country”. An EU credit institution is, by definition, an undertaking established (i.e., incorporated and authorised) within the European Union. The fact that such an institution operates a branch network that happens to include one or more branches located outside the EU does not alter the jurisdiction of establishment of the institution itself.

No separate legal personality — it remains part of the EU entity

As a matter of both EU and Irish law, a branch is not a separate legal entity from the undertaking that establishes it. A branch is simply a place of business through which that undertaking carries on its activities. A non-EU branch of an EU credit institution is therefore not itself a “third-country undertaking” capable of falling within new regime — it is, and remains, an extension of the EU-authorised credit institution. There is no separate “third-country undertaking” in the picture at all.

The non-EU branch is part of that EU entity and does not change the location of the institution’s head office.

Taken together, these points support the conclusion that the new authorisation regime only requires genuine third-country undertakings lending into the Irish market to do so through a locally established branch, and will not bring into scope EU credit institutions whose head office is within the EU but which happen to route or book certain lending activity through a branch located outside the EU.

Exemptions and carve outs

There are a number of exemptions and carve outs set out in CRD VI that may apply when lending into Ireland from outside the EU (if you are not a branch of an EU authorised credit institution), which briefly include:

• Reverse solicitation: the approach by the EU customer for a loan exclusively on its own initiative and not in response to advertising or targeted communication from the TCU.
• Inter-bank business or services: bank-to-bank lending is exempt.
• Intra-group business or services: the provision of core banking services (ie loans) to a group entity of the TCU is exempt.
• MiFID II business and ancillary services: CRD VI will not apply to banking activities that also qualify as MiFID II services or activities listed under Annex I, Section A, to MiFID II, as well as ancillary services such as granting credits or loans to provide these services.

In addition to the specific statutory exemptions, there are also a number of structuring solutions that can be explored (e.g. lending through a third country entity that is not a bank; lending to a non-EU borrower for on-lending intra-group to its EU affiliate company; or restructuring the transaction into a financial instrument that does not constitute “lending”).

Securitisations, ABS, structured finance instruments, derivative based contracts and usual bond funding structures with usual market terms, concepts and parties are unlikely to be caught by the new authorisation regime.

Grandfathered contracts

Contracts entered into before 11 July 2026 will benefit from grandfathering provisions. Contractual amendments and lifecycle events should be carefully considered and may lead to a loss of this grandfathering provision.

Contracts entered into between 11 July 2026 and 11 January 2027 will still fall within the scope of the authorised branch requirement.