The changes introduced under the Capital Requirements Directive ((EU) 2024/1619) (CRD VI), requiring the establishment of authorised European Union (EU) branches by third-country undertakings (TCUs) for core banking services provided into the EU, may significantly impact the operating models of numerous financial services entities.

CRD VI has now been transposed into Irish law by statutory instrument signed into law on 10 July 2026.

The impact on your firm will depend on whether (i) your firm is a TCU providing “core banking services” to EU customers (i.e. deposit-taking, lending, provision of guarantees or commitments) and (ii) any exemptions are available to you (e.g. reverse solicitation, services to credit institutions, intra-group services, MiFID-related exemptions, grandfathering).

William Fry is currently supporting clients on understanding structuring options and available exemptions and the Irish transposition of CRD VI.

Background

The latest capital requirements package contained EU-specific measures, including proposals to harmonise the regulatory framework governing third-country branches (being branches of TCUs) in EU Member States, which was previously a national competence.

The Capital Requirements Regulation (CRR) was implemented on 1 January 2025 and is directly applicable. CRD VI came into force on 9 July 2024 and has a transposition date of 10 January 2026. The third-country branch regime aspect of CRD VI will come into operation on 11 January 2027.

From 11 January 2027, a TCU providing “core banking services” to EU clients will be required to establish an authorised branch in each EU Member State where they operate or to operate through an authorised EU entity when providing core banking services.

In Ireland, the implementation of this new regime will mark a significant departure from the current position, where there is generally no restriction on the direct provision of certain cross border services (e.g. commercial lending) into Ireland from outside the EU.

Transposition

EU Member States were required to publish national transposing measures in respect of CRD VI by 10 January 2026. Ireland (and many other EU Member States) missed that deadline. CRD VI has now been transposed in Ireland by the European Union (Capital Requirements) (Amendment) Regulations 2026 (S.I. No. 326 of 2026) (the Transposing Regulations), which were signed into law by the Tánaiste and Minister for Finance on 10 July 2026. The Transposing Regulations insert a new Chapter 1C (Third-Country Branches) into Part 3 of the European Union (Capital Requirements) Regulations 2014 (S.I. No. 158 of 2014). As expected, Ireland has faithfully transposed the CRD VI third-country branch requirements, including the exemptions and grandfathering provisions of Article 21c, without gold-plating them. In the absence of additional guidance from the Irish Department of Finance or the Central Bank of Ireland (Central Bank) on the new regime, firms will need to work from the text of the Transposing Regulations. The new regime will generally apply from 11 January 2027, other than the regulatory reporting requirements for third-country branches, which apply from the commencement of the Transposing Regulations, consistent with the earlier application date that CRD VI requires for those provisions. William Fry’s Financial Regulation team is advising clients on the impact of the new regime.

Objective of the new EU Third-Country Branch Regime

Certain EU Member States already prohibit TCUs from providing certain banking services without a local licence or branch. However, prior to the CRD VI third country branch regime taking effect, a TCU that wished to provide core banking services (e.g. commercial lending – where the lending is not to a natural person) into Ireland on a cross-border basis did not require authorisation from the Central Bank.

CRD VI aims to end the current patchwork of national regimes by:

• harmonising the provision of “core banking services”
• harmonising the exemptions and carve outsto the third-country branch provisions
• setting out minimum authorisation requirementsfor third-country branches
• permittingnational competent authorities to require third-country branches to apply for authorisation as a subsidiary in certain circumstances.

Core banking services

“Core banking services” under Article 21c of CRD VI include:

• accepting deposits and other repayable funds
• lending, including consumer credit, credit agreements for real estate, factoring (with or without recourse), and financing commercial transactions (including forfeiting)
• issuing guarantees and commitments.

Which Third Country Undertakings would be caught by the new regime?

Article 21c of CRD VI, will effectively prohibit TCUs from providing “core banking services” in an EU Member State without establishing a branch there.

When scoping whether the new licencing regime applies to a TCU providing core banking services in an EU Member State, entities must consider the definition of “credit institution” in CRR, which includes an undertaking whose business consists of taking deposits or other repayable funds from the public and granting credits for its own account.

In the case of deposit taking, the new authorisation requirement will apply to all types of TCU. For other types of core banking services, TCUs meeting the criteria for a credit institution under CRR, if it were established in the EU, would be captured.

The definition of credit institution in CRR includes large investment firms (i.e. firms carrying out the MiFID activities of “dealing on own account” or “underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis”, where one of the following applies:

• the total value of the consolidated assets of the undertaking established in the EU, including any of its branches and subsidiaries established in a third-country, is equal to or exceeds €30 billion;
• the total value of the assets of the undertaking established in the EU, including any of its branches and subsidiaries established in a third country, is less than €30 billion, and the undertaking is part of a group in which the total value of the consolidated assets of all undertakings in that group that individually have total assets of less than €30 billion and that carry out any of the activities referred to above, is equal to or exceeds €30 billion; or
• the total value of the assets of the undertaking established in the EU, including any of its branches and subsidiaries established in a third country, is less than €30 billion, and the undertaking is part of a group in which the total value of the consolidated assets of all undertakings in the group that carry out the activities referred to above, is equal to or exceeds €30 billion, where the consolidating supervisor, in consultation with the supervisory college, so decides in order to address potential risks of circumvention and potential risks for the financial stability of the EU).

For the purposes of the second and third bullets above, where the undertaking is part of a third-country group, the total assets of each branch of the third-country group authorised in the EU shall be included in the combined total value of the assets of all undertakings in the group.

This definition excludes commodity and emission allowance dealers, collective investment undertakings and insurance undertakings.

Exemptions and carve outs

 The following exemptions and carve outs set out in CRD VI may be available to TCUs providing core banking services in an EU Member State, depending on the circumstances:

Reverse solicitation

The requirements of CRD VI will not apply where the client or counterparty approaches the TCU exclusively on its own initiative for the provision of that activity. Key considerations in respect of the reverse solicitation exemption include:

• Exclusive client initiative – A key aspect of reliance on this exemption is the approach by the EU-located or established entity exclusively on its own initiative and not in response to advertising or targeted communication from the TCU.
• No marketing or promotion – Any direct or indirect solicitation, such as marketing emails, targeted online ads, promotional websites in an EU language, or brand advertising, will prevent the TCU from relying on the reverse solicitation exemption. The exemption is limited to the specific service requested.
• Strict and narrowly interpreted exemption – EU regulators and national NCAs usually interpret the exemption very narrowly. The exemption is used across other EU regulatory frameworks, such as MiFID II for investment services and MiCAR for crypto‑asset service providers (CASPs), where ESMA underlines that the exemption is very narrowly framed.
• Documentary evidential burden – TCUs relying on the reverse solicitation exemption must be able to prove that the request originated entirely from the client (e.g., using logs, inquiry forms, recorded communications, etc.).
• One-off use – This exemption allows operational flexibility for one-off transactions and is not designed, intended or suitable for ongoing or scalable activity.
• Regulatory scrutiny – Reliance on this exemption will likely be subject to intense regulatory scrutiny.
• Brexit guidance from the Central Bank – Although issued in a different context some time ago, the guidance issued by the Central Bank in connection with Brexit (Brexit Guidance), which includes the Dear CEO Letter regarding withdrawal of the United Kingdom from the European Union, may provide an indication of factors which the Central Bank may take into account when assessing whether a TCU is carrying on banking business in Ireland including:
  • presence in the State;
  • marketing materials targeted at Irish-based customers to inform them of the services provided by a credit institution authorised in another jurisdiction;
  • having in place, or adapting, operational infrastructure or policies specifically to facilitate the provision of banking services to Irish-based customers;
  • the volume of the Irish customer base (with particular regard to new customers following the UK’s withdrawal from the EU) – a material number of customers in the State availing of a banking service provided by a credit institution authorised in another jurisdiction is indicative of the conduct of banking business in the State;
  • the classification of customer – a proportionally higher number of Irish-based retail customers would tend to indicate that such customers are being targeted.

The Brexit Guidance further states that regarding the second bullet point in particular, the firm should be able to evidence, upon request from the Central Bank, the arrangements and mechanisms it has in place to ensure that existing Irish-based customers are not intentionally, or unintentionally, subject to marketing of financial products or services.

Inter-bank business or services

The CRD VI requirements will not apply where the TCU provides services to another “credit institution”. Therefore, bank-to-bank lending would not be captured by the new regime.

Intra-group business or services

The provision of core banking services to a group entity of the TCU is exempt.

MiFID II business and ancillary services

The CRD VI requirements 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.

The exact scope of the MiFID exemption under CRD VI is unclear. Whilst Article 21c(4) states that Article 21c will not apply to the MiFID services or activities listed in Annex I, Section A MiFID II, it is not clear from the text that Annex I, Section B services / activities (such as custody) are also excluded from the scope of the Article. As Ireland has faithfully transposed the Directive text on this exemption, this ambiguity remains.

Grandfathered contracts

Consistent with CRD VI, the Transposing Regulations preserve clients’ acquired rights under existing contracts entered into before 11 July 2026. That cut-off date has now passed, so contracts entered into on or after 11 July 2026 will not benefit from grandfathering. As the date is fixed by CRD VI itself, the late Irish transposition did not extend it. However, where the grandfathering provision is availed of, contractual amendments and lifecycle events should be carefully considered and may lead to a loss of this exemption.

Third-country branch requirements

If an exemption or carve out is not available to a TCU intending to provide core banking services into the EU, that entity must establish a branch in each EU Member State where it operates and obtain authorisation under Title VI of CRD VI to provide core banking services.

Title VI sets out the framework for authorisation, supervision, and regulatory co-operation in respect of third-country branches operating in the EU.

Key changes for branches

Establishment/Authorisation requirement

Prior authorisation from the competent authority in the host EU Member State will be required to provide services to clients in that EU Member State.

On 7 July 2026, the EBA published its final guidelines further specifying the:

• information to be provided to the competent authorities upon application for authorisation of a third-country branch, including the programme of operations, the organisational structure and risk management requirements;
• procedure for authorisation of the third-country branch, as well as the standard forms and templates for the provision of the information requirements;
• conditions for authorisation; and
• conditions under which competent authorities may rely on information that has already been provided in the process of any prior third-country branch authorisation.

The guidelines complete a package of EBA deliverables on the new regime published since January 2026, including technical standards on booking arrangements, minimum common reporting requirements and supervisory cooperation and colleges, and guidelines on the instruments eligible for the capital endowment.

Supervisory regime

Third-country branches will be subject to minimum regulatory requirements, including requirements relating to capital endowment, liquidity, internal governance and risk management, and booking.

Under the Transposing Regulations, a class 1 third-country branch must maintain a minimum capital endowment of 2.5% of its average liabilities for the three preceding annual reporting periods, subject to a floor of €10 million, while a class 2 branch must maintain 0.5%, subject to a floor of €5 million, in each case held in eligible instruments deposited in an escrow account in the State. Branches must also hold unencumbered liquid assets in Ireland sufficient to cover 30 days of liquidity outflows, with class 1 branches required to comply with the liquidity coverage requirement under CRR. In addition, branches must have at least two persons in Ireland effectively directing the business and must maintain a local registry book of assets and liabilities supported by a documented booking policy. Class 1 branches must report to the Central Bank at least twice a year and class 2 branches at least annually.

The Central Bank may waive the liquidity requirement, and part of the reporting requirements relating to the head undertaking, for qualifying third-country branches.

An authorised branch will not benefit from passporting and may not provide those activities in other EU Member States on a cross‑border basis, except for intra-group funding transactions concluded with other third‑country branches of the same head undertaking and for transactions entered based on reverse solicitation of services in accordance with Article 21c. Therefore, notwithstanding the time and cost involved, setting up a full EU subsidiary with passporting rights might be a preferable option for some clients.

Supervisory powers of national competent authorities

NCAs will have to classify third-country branches into one of two categories, each one being subject to different standards:

Class 1

Where branches meet any of the following conditions:

• the total value of the assets booked or originated by the third-country branch in the EU Member State is equal to or greater than €5 billion as reported in the immediately preceding annual reporting period;
• the third-country branch’s authorised activities include taking deposits or other repayable funds from retail customers, provided that the amount of such deposits and other repayable funds is equal to or greater than 5% of the total liabilities of the third country branch or exceeds €50 million); and
• the third-country branch is not a “qualifying third-country branch” (see below).

Class 1 branches will be subject to (i) more onerous capital, liquidity and internal control requirements and (ii) a higher level of supervision.

Class 2

Where a third-country branch does not meet any of the conditions above.

Qualifying third-country branch

There will also be an additional category of “qualifying third country branch” (QCB) where:

• the head undertaking of the branch is established in a country that applies prudential standards and a supervisory oversight in accordance with the third country’s banking regulatory framework that are at least equivalent to CRD VI and CRR;
• the supervisory authorities of the head undertaking are subject to confidentiality requirements that are at least equivalent to those in CRD VI; and
• the head undertaking is established in a country that is not listed under the Anti-Money Laundering Directive as a high-risk third country that has strategic deficiencies in its regime on anti-money laundering and counter terrorist financing.

A third country branch that is not a QCB will attract a Class 1 status and will become subject to the higher requirements.

The European Commission will decide whether a third country is equivalent or not for the purposes of the QCB determination (and may request assistance in this regard from the European Banking Authority).

TCUs from countries that do not have an equivalence determination will still be able to establish a branch in the EU, however, they would attract Class 1 status and be subject to the most onerous requirements.

TCUs with existing branches in the EU will likely be subject to closer supervision within the EU than they were used to, especially where the TCU has branches in more than one EU Member State. NCA’s would, for instance, be able conduct on‑site inspections and require detailed reporting and recovery planning.

Establishment/Authorisation of a branch in Ireland

Establishment of an authorised third-country branch in Ireland is currently governed by Section 9A of the Central Bank Act 1971. The Central Bank is the national competent authority in Ireland, empowered to authorise and supervise regulated financial entities. From 11 January 2027, third-country branches will instead be authorised by the Central Bank under the new regime introduced by the Transposing Regulations. The Central Bank may decide that authorisations of third-country branches granted on or before 10 January 2027 remain valid, provided those branches comply with the minimum requirements of the new regime.

The Transposing Regulations also empower the Central Bank to require a third-country branch to apply for authorisation as a credit institution under Section 9 of the Central Bank Act 1971, including where the branch is assessed as having systemic importance, where it has carried out core banking services with clients or counterparties in other EU Member States, or where the assets of the branch in Ireland are equal to or greater than €10 billion or the aggregate assets of the group’s third-country branches in the EU are equal to or greater than €40 billion. In addition, the Central Bank cannot authorise a deposit-taking branch unless it is satisfied that depositors have protection corresponding to that provided under the European Union (Deposit Guarantee Schemes) Regulations 2015.

National Discretions

In Q1 2025, the Irish Department of Finance publicly consulted on the transposition of the national discretions under CRD VI.

Under Article 48a(4) CRD VI, EU Member States may exercise discretion to apply to branches of TCUs authorised in their territory, or to certain categories thereof, the same requirements that apply to EU credit institutions authorised under CRD, instead of the branch-specific requirements set out in Title VI of CRD VI.

Ireland has chosen not to exercise this discretion, which would apply more onerous requirements (i.e. requirements applying to EU credit institutions authorised under CRD) to branches of TCUs authorised in Ireland, than the branch requirements set out in Title VI of CRD VI. For further information on Ireland’s exercise of national discretions, please see our article here.

Conclusion and next steps

With the transposition of CRD VI into Irish law and the publication of the EBA’s final guidelines on the authorisation of third-country branches on 7 July 2026, the shape of the new CRD VI third-country branch regime under Irish law is now settled.

If you think you may be impacted by the new branch requirements under CRD VI, you should obtain Irish regulatory advice without delay to assist you to conduct a scoping exercise.

It is advisable to start by reviewing your global cross-border banking business model to establish which business lines are in scope of the new restrictions under CRD VI.

You should also review your current EU/EEA business model.

A next step would be to analyse and determine whether your TCU provides any “core banking services” in the EU and whether it would qualify as a “credit institution” under CRR, if it were established in the EU.

If so, you should establish whether any exemptions or carve outs under CRD VI can be relied on to enable your undertaking to continue or conduct business in the EU/EEA. If none are available, you may be able to look at alternative structuring methods.

It is also advisable to review which EU jurisdictions a branch must be established in and analyse the requirements for establishing a branch in each relevant jurisdiction – considering new capital, liquidity and other prudential requirements.

Non-EU financial institutions with existing branches in the EU may opt to convert these into subsidiaries to provide core banking services on a cross-border basis into other EU Member States under passporting rights. They may also consider establishing a third-country branch or branches in several EU Member States or setting up an authorised EU credit institution

Contact Us

William Fry’s Financial Regulation team has extensive experience advising firms on the impact and applicability of the CRD VI third-country branch regime and on structuring solutions to minimise the impact of the regime.

Our cross‑departmental team of lawyers from Financial Regulation, Asset Management and Investment Funds, Fund Finance, Debt Finance, Aviation, Debt Capital Markets and Insurance practices can assist with CRD VI implementation and compliance.

For further information, please contact Shane Kelleher, Louise McNabola, John Aherne or your usual William Fry contact.