Proposed change of CRD: New regime for third-country entities and banking M&A operations

On 27 October 2021, the European Commission approved a new Banking Package implementing the Basel III agreement to bolster the EU’s banking regulatory framework and strengthen banks’ resilience to potential future economic impacts. Among other things, the legislative package includes a proposal for a directive to amend Directive 2013/36 (Capital Requirements Directive), the “CRD VI” proposal. The wide scope of this proposal encompasses matters from rules on independency of competent authorities to a number of provisions on environmental, social and governance risk regulation (ESG).

Among the regulatory changes proposed in CRD VI, we highlight (i) the obligation of third-country companies to constitute a branch to be able to provide banking services in a Member State, and (ii) the need for prior approval by national authorities for significant M&A operations involving banking institutions, even as mere acquirers.