For many asset-based lenders (“ABLs”) that do not take deposits, CRD VI’s branch requirements will not apply directly — but reliance on the non-bank carve-out requires careful, structure-specific analysis, and does not eliminate all regulatory risk.

General

CRD VI (Directive 2024/1619) introduces an EU-wide framework governing how non-EU undertakings may provide core banking services to EU borrowers. Article 21c requires third-country undertakings providing core banking services (including lending) within a Member State to establish a branch authorised under the Directive (a “third-country branch”). CRD VI applies primarily to “credit institutions” as defined under the Capital Requirements Regulation (“CRR”). The regime sits alongside existing national licensing frameworks. It should also be noted that CRD VI introduces other obligations (including ESG risk management and governance requirements) beyond the scope of this note.

Scope: the non-bank carve-out

CRD VI is relevant to non-EU based ABLs with EU borrower exposure. Under Article 4(1)(1) of the CRR, a “credit institution” is an undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account. Both aspects must be satisfied; an entity that lends but does not take deposits will not, on a strict reading, constitute a credit institution and should fall outside CRD VI’s third-country branch requirement. This is the analytical basis of the non-bank carve-out. However, where the carve-out is relied upon, lenders must ensure that the lending entity, its contractual documentation and its funding arrangements are each consistent with that characterisation (in particular, that the entity does not inadvertently satisfy the deposit-taking requirement (for example, by issuing instruments characterisable as repayable funds from the public)). This requires transaction-specific legal advice.

Key dates, grandfathering and other points to note

11 July 2026: The grandfathering window closes. Existing contracts entered into before this date benefit from transitional relief under Article 21c(5), permitting continued performance without third-country branch authorisation. After this date, new contracts (and likely renewals, extensions and material amendments) fall within the new regime. The European Banking Authority’s July 2025 report under Article 21c(6) declined to recommend any broader exemptions (e.g. for wholesale-only lending or intragroup transactions), confirming that the regime applies in full to wholesale lending. The relief applies to performance of existing contracts only (material amendments, novations or refinancings after the cut-off are likely to constitute new contracts outside the scope of the relief). For revolving and uncommitted facilities, the treatment of post-cut-off drawdowns is unsettled and requires specific legal advice.

11 January 2027: The full branch requirement applies.

Bank ABLs fall within scope and must obtain third-country branch authorisation in each relevant Member State. For non-bank ABLs, CRD VI should not apply directly on a strict reading of the credit institution definition. However, this does not mean non-bank lenders may lend freely into the EU. For example, several Member States regulate lending independently of deposit-taking (e.g. France’s monopole bancaire, Germany’s KWG, and specific frameworks in Ireland and the Netherlands) and national transpositions of CRD VI may extend equivalent or additional obligations. Assuming the new requirements do not apply solely because a lender is not a bank carries real risk.

Group structures: Group arrangements add complexity. For example, a non-EU parent guaranteeing or funding an EU subsidiary’s lending may itself be providing core banking services, syndicate participation raises questions about the characterisation of each participant’s activities, and fronting arrangements (where an EU-authorised entity acts as lender of record but a non-EU entity provides the economic substance) may attract regulatory scrutiny. Each group entity should be assessed individually.

Jurisdictional fragmentation: CRD VI is a directive, not a regulation, and there is material divergence in national implementation. The analysis in Germany may differ from France, Ireland, Luxembourg or the Netherlands (both as to scope and as to conditions for third-country branch authorisation. Lenders with multi-jurisdictional EU exposure must thus assess each jurisdiction individually.

Reverse solicitation: CRD VI preserves a narrow exemption for services provided at the exclusive initiative of the client. In practice, regulators interpret this restrictively (any pattern of repeated transactions, EU-facing marketing presence, or proactive outreach to EU borrowers is likely sufficient to disapply the exemption). Lenders should not structure their origination model around this carve-out nor without specific legal advice and contemporaneous records evidencing the client’s exclusive initiative must be kept.

Enforcement: Regulatory consequences of lending without the required third-country branch authorisation may include fines, public censure and orders to cease business. There is also a jurisdiction-dependent risk that non-compliant contracts may be unenforceable or voidable, or that borrowers may rely on non-compliance as a defence to enforcement proceedings.

Practical steps: ABLs with EU borrower exposure should, as a priority: (a) take steps to classify each group entity by reference to the CRR credit institution definition; (b) map EU borrower exposure by jurisdiction; (c) assess national licensing requirements in each relevant jurisdiction (both CRD VI transposition and pre-existing frameworks); (d) evaluate structural options (third-country branch, EU subsidiary, fronting or syndication); (e) review existing facilities for grandfathering eligibility; and (f) engage with legal advisers in each relevant jurisdiction for transaction-specific advice.