by Laura Vermeulen, Head of Strategy & Business Development at Indigita SA
Introduction
The revised Capital Requirements Directive (CRD VI), adopted in June 2024 as part of the EU Banking Package, marks a significant shift in the regulation of non-EU banks operating in the European Union. Aimed at strengthening financial stability and harmonizing supervision across Member States, CRD VI significantly reduces flexibility for third-country institutions.
For Swiss banks, with their close ties to EU clients and heavy reliance on cross-border servicing, this development is particularly impactful. Member States must transpose CRD VI into national law by 10 January 2026, with most provisions taking effect immediately. The new third-country branch (TCB) regime, which directly affects Swiss banks, will apply from 11 January 2027.
Key Regulatory Changes Introduced by CRD VI
CRD VI fundamentally alters the operating environment for third-country institutions. From January 2027, the cross-border provision of core banking services, such as deposit-taking, lending, guarantees, and commitments, without a physical EU presence is prohibited. This removes existing passporting rights and requires third-country banks to obtain authorization for a locally established branch in each Member State where they operate.
The directive introduces a harmonized classification of third-country branches into Class 1 and Class 2, applying stricter prudential and governance standards to the former based on systemic importance and risk exposure. All branches must meet minimum requirements regarding capital, liquidity, governance (e.g., appointment of two approved people), internal booking models, and detailed reporting. Supervisory authorities may also require TCBs to subsidiarize if they pose systemic risks or exceed asset thresholds. Additionally, national waivers, such as the BaFin letters, will be withdrawn, standardizing compliance requirements across the EU.
Exemptions and Transitional Provisions
CRD VI offers only narrow exemptions to the establishment requirement. The most notable is reverse solicitation, which permits service provision when a client initiates contact entirely on their own initiative. However, this exemption is tightly constrained and open to interpretation, with firms required to carefully document all such interactions.
Other limited exemptions exist for interbank and intragroup transactions, though these do not apply to retail or commercial clients. Grandfathering provisions allow servicing of contracts signed before 11 July 2026 without a branch until January 2027, but changes to contract terms or parties may revoke this protection. Uncertainty remains around the definition of “active” solicitation and whether factors like client location determine if a service is “provided in” a Member State. Given the risk of divergence in national implementation, institutions must monitor country-specific guidance closely.
Strategic Implications for Swiss Banks
CRD VI compels Swiss banks to fundamentally reassess their EU cross-border strategies. Institutions must determine whether their activities constitute “active solicitation,” which would trigger local licensing obligations, and evaluate the applicability of exemptions such as reverse solicitation or intragroup services. With national waivers eliminated, Swiss banks will need to establish authorized TCBs in each Member State where they offer core banking services, replacing former passport-light models with a formal regulatory footprint.
This shift entails substantial operational, legal, and financial burdens. Setting up TCBs or subsidiaries requires compliance with stringent governance, capital, liquidity, and reporting standards, and may necessitate structural reorganizations to align with EU supervision. The ban on cross-border servicing without a branch further restricts centralized models, forcing banks to reevaluate client segmentation, internal booking, and service delivery frameworks. Overall, CRD VI marks a decisive move toward regulatory harmonization, leaving Swiss banks with limited flexibility and a pressing need to adapt.
Recommendations and Next Steps
Swiss banks should begin by mapping their cross-border activities, reviewing client locations, service types, and delivery channels, to assess whether TCB authorization is required under CRD VI. This includes determining whether current operations qualify as “active provision” of services and whether exemptions like reverse solicitation or intragroup services apply.
Contract portfolios must be reviewed to identify agreements eligible for grandfathering and to avoid modifications that could trigger reclassification. Strategically, firms should evaluate whether to apply for TCB authorization, shift activities into existing EU subsidiaries, or restructure offerings to fall under narrow exemptions.
Given the scope for additional local requirements and interpretation risks, early and proactive engagement with national regulators is strongly recommended to clarify licensing obligations and reduce uncertainty ahead of the 2027 implementation deadline.
Conclusion
CRD VI represents a turning point in EU market access for third-country banks. For Swiss institutions, the end of flexible, cross-border models presents both operational challenges and strategic decision points. Early planning, thorough legal review, and regulatory engagement will be essential to ensure continued access to EU markets under the new regime.
