CRD VI is now law

At a glance:

• The EU has now published its final text of the EU’s sixth Capital Requirements Directive (known as CRD VI).
• Why now? given the number of considerations in play, and the tight timelines to what is seen in effect a mid-2026 deadline, non-EU banks must continue to progress their impact assessment and begin to plan their implementation activities, not only to be ready to comply, but to be “right-sized” for when these potentially costly rules take effect.

Overview of CRD VI and context

In June 2024, the final text CRD VI was published in the Official Journal of the European Union. Forming part of the new Banking Package, it is clear that the new rules will have a significant effect on many non-EU banks’ European footprints: significantly restricting their ability to provide “core banking” services into the EU, as well as introducing a new harmonised regime for the regulation of TCBs via targeted amendments to CRD IV (which we covered previously).

Cross-border core banking services and TCBs are currently subject to varying national rules across Member States. Differences also exist within MS due to national competent authorities (NCAs) waiving certain requirements for individual TCBs. Therefore, establishing more uniform requirements for both is a significant step towards EU-wide harmonisation of the rules governing non-EU banks’ EU activities. However, we do not expect complete uniformity (even within the scope of CRD VI’s provisions) – CRD VI is a Directive, not a Regulation, meaning MS will implement its provisions in their own legal frameworks with inevitable differences in approaches.

Following the publication of the Directive in June 2024 we expect that NCAs will begin to publish their local regulations and guidance materials by January 2026, ahead of the publication of guidelines by the EBA in July 2026, and the go-live date for TCB and cross-border changes in January 2027.  

Implications for firms

CRD VI will force non-EU banks to rethink their overall European footprint. Foremostly, simply to comply with the new rules, firms must decide the future of any existing cross-border banking services that will cease to be compliant. This may involve setting up or expanding existing TCBs in MS where they have existing cross border business, transferring business to an existing (or new) EU subsidiary able to passport across MS, establishing lending companies if possible or ultimately ceasing business in that MS altogether.

Migrating banking business to an EU balance sheet, as well as reforming TCBs to comply with the new rules, poses significant operational and financial implications for firms. Extensive planning and preparation will therefore be required in order to ensure that firms are able to meet these requirements whilst minimising execution risk and disruption to customers.

Deloitte’s CRD VI: Strategy and Response planning guide has been created been created in order to help firms stand up their CRD VI programmes and articulate the challenges posed by the directive to stakeholders.

Conclusion

CRD VI may significantly affect EU operating models, depending on several variables including current EU operating structure as well as if, how and what type of business non-EU entities conduct business with EU clients. Firms should begin to engage with NCAs and Advisors to discuss areas of the Directive which require clarification as part of their ongoing impact assessments. Change functions should also be engaged to establish CRD VI programmes and agree project timings, key decisions, no-regrets work whilst considering the expected deadlines of the Directive and any dependencies on other ongoing programmes.