Pim Rank: CRD VI - a ban on banking services from third countries?
This column was originally written in Dutch. This is an English translation
The revised Capital Requirements Directive (CRD VI) makes it considerably more difficult for firms based outside the EU to provide banking services within the EU. The question is whether the proposed restrictions are proportionate.
By Prof. Pim Rank, Solicitor at NautaDutilh in Amsterdam and Professor of Financial Law at Leiden University
CRD VI requires EU Member States to amend their legislation so that third-country banks which take deposits, grant credit or provide guarantees in the relevant EU Member State must open a branch in that EU Member State and hold a licence for that branch. In this context, third-country banks are defined as undertakings established in a third country which, under EU rules, would be classified as credit institutions if they were established in the EU. These are therefore undertakings that attract deposits and other repayable funds from the public and grant credit for their own account.
CRD VI also requires the prohibition on attracting demand deposits to be tightened. This prohibition is currently limited in the Netherlands to the attraction of demand deposits from the public. The attraction of demand deposits from professional market participants is, however, permitted. Following the implementation of CRD VI, however, it will also be prohibited for an undertaking from a third country – regardless of whether it is a bank or not – to attract demand deposits from parties other than the public. This means that the attraction of demand deposits from professional market participants by an undertaking from a third country will no longer be permitted, except through a licensed branch.
The consequences of the implementation of CRD VI in the Netherlands are significant. For instance, the granting of loans in the Netherlands from a third country is currently unregulated (except to consumers). Following the implementation of CRD VI, this will only be possible if the loans are granted by a non-bank, i.e. a party that does not also attract deposits and other callable funds from the public. The alternative is to open a branch in the Netherlands and apply for a licence. Whilst it is currently still possible to attract demand deposits in the Netherlands from professional market participants from a third country, following the implementation of CRD VI, a licensed branch in the Netherlands will also be required for this purpose.
These restrictions will make it considerably more difficult for third-country firms to operate in the European market. This applies both to the granting of loans to parties established in the EU and to the acceptance of demand deposits from parties established in the EU. As all this occurs on a large scale in practice, the question arises as to whether the proposed restrictions are truly necessary. I can well imagine that it is desirable to create a harmonised supervisory framework within the EU for banking services from third countries. I can also imagine that it is desirable to offer depositors based in the EU greater protection against the credit risk they face from counterparties in third countries. On the other hand, the impact of the new rules on the business model of these counterparties is significant, and the proposals are not really proportionate to the risks. From that perspective, this appears to be a case of European protectionism.
The implementation process is currently still in full swing. The intention is for the new rules to apply from 11 January 2027. A transitional arrangement will apply to contracts concluded before 11 July 2026.