The European Banking Authority (EBA) has published a report on the direct provision of core banking services from third countries under Article 21c of the Capital Requirements Directive (CRD). Its quantitative and qualitative analysis did not identify evidence to recommend amending Article 21c, but it concludes that further clarification on how the provision interacts with other sectoral legislation would help authorities and market participants. The report notes that several factors make it difficult to measure the impact of Article 21c’s prohibition on direct cross-border provision from third countries, while also highlighting the flexibility embedded in the regime, including the ability for EU financial sector entities to obtain services through reverse solicitation or via third-country branches or subsidiaries established in the EU. It also points to exemptions and carve-outs such as interbank and intragroup transactions, a Markets in Financial Instruments Directive carve-out for MiFID investment services and related ancillary services, and contract grandfathering to support transition. At the same time, Article 21c is not explicit on its interaction with the Undertakings for Collective Investment in Transferable Securities (UCITS) and the Alternative Investment Fund Managers Directive (AIFMD), notably where those frameworks entitle EU financial sector entities to receive core banking services to support ongoing operations in third countries; the EBA suggests such clarification could also be provided via its Q&A tool. The report was prepared under the mandate in Article 21c(6) CRD to assess whether direct provision without an EU branch should be extended beyond EU credit institutions to other EU financial sector entities, taking account of financial stability and EU competitiveness considerations, with the EBA required to consult the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority.
European Banking Authority 2025-07-23
European Banking Authority finds no evidence to amend CRD rules on direct third-country banking services and calls for clearer interaction with UCITS and AIFMD
The European Banking Authority (EBA) published a report on the direct provision of core banking services from third countries under Article 21c of the Capital Requirements Directive, finding no evidence to amend the article but recommending further clarification on its interaction with other sectoral legislation. The report highlights the regime's flexibility, including reverse solicitation and exemptions for interbank transactions, while noting the need for clarity on its interaction with UCITS and AIFMD. The EBA suggests using its Q&A tool for guidance.