Third-country branch authorization guidelines finalized under CRD
The European Banking Authority (EBA) has published its final Guidelines on the authorisation of third-country branches (TCBs) under the Capital Requirements Directive (CRD). These guidelines specify application information, procedures, and assessment conditions for TCBs.
Application roadmap for TCBs
The EBA's final Guidelines on the authorisation of third-country branches (TCBs) fulfill the mandate under Article 48c(8) of the Capital Requirements Directive (CRD).
They specify the information required for authorisation applications, including the TCB's programme of operations, business plan, capital endowment, liquidity requirements, internal governance, booking arrangements, and reporting.
The guidelines also detail the authorisation procedure, assessment conditions, and how competent authorities can rely on previously provided information.
This framework is addressed to national competent authorities responsible for receiving, assessing, and granting TCB authorisations, covering applications subject to Title VI of the CRD.
Cooperation with third-country authorities is crucial for assessing the head undertaking's prudential compliance, especially given that TCBs lack separate legal entities.
Proportionality in a new regime
The guidelines implement a new minimum harmonisation regime for third-country branches (TCBs), introduced by a CRD amendment (Directive (EU) 2024/1619).
This regime covers TCBs providing core banking services like deposits, lending, and guarantees.
A key aspect is proportionality, categorising TCBs into Class 1 (higher risk) and Class 2. Class 1 criteria include total assets over EUR 5 billion, significant retail deposits, or head undertakings from high-risk AML/CFT or non-equivalent prudential jurisdictions.
The new framework, including these guidelines, will apply from 11 January 2027, requiring existing TCBs to comply.
Standardizing the gatekeepers
These guidelines represent a crucial step towards harmonizing the supervision of third-country branches within the EU, closing a long-standing regulatory gap.
While the framework is complex, its tiered approach to proportionality is essential for managing diverse risk profiles effectively.
Ultimately, this move enhances financial stability by ensuring consistent oversight of non-EU banking entities operating within the Union.