EBA publishes consultations on Draft RTS and Guidelines for Third-Country Branches under CRD VI

On 10 July 2025, the European Banking Authority (EBA) published three significant consultation papers on draft regulatory technical standards (RTS) and guidelines relating to the new prudential framework for third-country branches (TCBs) operating in the European Union.

These proposals implement mandates under the revised Capital Requirements Directive (CRD IV, as amended by CRD VI – Directive (EU) 2024/1619) and are a key step in harmonising the treatment of TCBs across Member States.

The deadline for comments on each consultation is 10 October 2025, with the EBA required to submit the draft RTS to the European Commission by 10 January 2026. The guidelines are intended to apply from 11 January 2027, when the new broader rules on TCBs under CRD VI kick-in (see our previous briefings here and here).

In this briefing, we provide an overview of each consultation paper, highlighting the key proposals, and practical implications for third-country banking groups and their EU branches.

1. Draft RTS on Booking Arrangements for Third-Country Branches (EBA/CP/2025/16) (the "Booking RTS")

1. Background and Rationale

Article 48h of CRD VI requires TCBs to maintain a registry book that comprehensively and precisely records all assets and liabilities either booked or originated by the branch in the Member State, ensuring these are managed autonomously within the branch. The EBA is mandated by Article 48h(4) to develop an RTS specifying the methodologies for identifying, tracking, and recording assets, liabilities, and off-balance sheet items for these purposes.

The new requirements under the Booking RTS are significant because the classification of a TCB (and thus the intensity of their supervisory regime) depends on the total value of assets booked or originated by the branch in the Member State. The Booking RTS is designed to prevent circumvention of prudential requirements and to ensure that all relevant risks and activities of TCBs are properly recorded, monitored, and managed.

2. Key Proposals and Requirements

Scope and Purpose

• As mentioned above, TCBs must maintain a registry book that provides a comprehensive and precise record of these items, managed autonomously from their head undertaking.
• The RTS set out the methodology TCBs must use to identify, track, and record all assets, liabilities, and off-balance sheet items arising from their activities in the EU.

Bookkeeping System

TCBs are required to have a dedicated bookkeeping system, separate from their head office, that provides a comprehensive and precise record of all assets and liabilities “booked” or “originated” in the Member State, as well as off-balance sheet items, where:

• “Booked” assets/liabilities are those recognised under the applicable accounting framework as a result of TCB activities in the Member State;
• “Originated” assets/liabilities are those created by the TCB but subsequently transferred to another entity (e.g. due to the initial or subsequent full or partial transfer of risks and rewards or obligations to other entities); and
• Off-balance sheet items include contingent assets/liabilities and derivatives not recognised on the balance sheet under the applicable accounting framework.

The transactions that must be recorded in the registry book include:

• transactions carried out on the basis of the TCB's authorised activities;
• transactions carried out on the basis of services or activities for which no authorisation is required;
• intragroup transactions, including funding transactions carried out with the TCB's head undertaking and other third-country branches of the same head undertaking; and
• transactions entered into on the basis of reverse solicitation.

Minimum Content:

The Booking RTS specifies the minimum information to be recorded, including:

• counterparty information (e.g. name, location, economic activity, default status);
• instrument details (e.g. principal or notional amount, instrument type, relevant dates (i.e. maturity, inception), interest rate, payment frequency, currency);
• accounting information (e.g. accounting classification, carrying amount, impairment, amortisation);
• protection received (including type and value);
• identification of instruments held for capital endowment purposes under Article 48(e) of CRD VI; and
• information on risk transfers and off-balance sheet items, including:
  • for originated assets/liabilities, the TCB must include information in the registry book on the transferee and type of transfer must be recorded; and
  • for off-balance sheet items, relevant details such as notional amount, trigger events, and maturity must be included.

Risk Information:

• TCBs must record in the registry book qualitative and quantitative information on the risks associated with their activities and detail how these are managed.
• The level of detail to be included should be proportionate to the size, complexity, and risk profile of the TCB. Quantitative information on risks generated by the TCB's activities should be measured according to the relevant internal risk management metrics.

Intragroup Transactions:

• All intragroup transactions, including funding and risk transfers, must be recorded as if conducted with external parties.

3. Implications

The RTS will require TCBs to enhance their local record-keeping and risk management systems, ensuring that EU supervisors have a clear and consistent view of the branch’s activities and exposures.

The registry book is intended to support more effective supervision by competent authorities.

TCBs should begin preparations for establishing their registry book well in advance of the regulatory deadline, as the process is likely to be complex and time-consuming, with the following complicating factors:

• Scope not limited to core banking activities: The requirement to maintain a registry book is not limited to recording assets and liabilities related to "core banking activities" under CRD VI (i.e. deposit taking, lending activity, and guarantees and commitments) and therefore the obligations will extend to all activity carried out by the TCB.
• Timing horizon - new and legacy activities: Further, the RTS does not limit the scope of the obligation to assets, liabilities, and off-balance sheet items booked originated after the coming into force of the RTS, but rather the obligation will apply to all live transactions regardless of when they were entered into. Transactions must continue to be tracked and recorded until all associated risk, rewards, or obligations transferred have expired, been discharged, cancelled, or fulfilled.
• Information availability and data quality: Given the scope and timing factors above, TCBs will undoubtedly encounter data gathering and data quality issues, particularly in relation to legacy transactions, particularly where the necessary information is dispersed across different systems, group entities, or different teams within the organisation.
• Data collection and transformation: Once the relevant data is collected, a key challenge for TCBs will be the transformation of existing data into the format and level of detail required by the new rules.

2. Draft Guidelines on Instruments for TCB Capital Endowment ("Capital Endowment Guidelines")

1. Background and Rationale

CRD VI introduces a minimum capital endowment requirement which requires TCBs to always maintain a segregated pool of assets to ensure that sufficient assets are available locally to protect depositors and creditors in the event of the TCB's resolution or winding-up. These assets must be held in an escrow account within the relevant Member State and must be available for immediate and unrestricted use.

Article 48e(4) mandates the EBA to specify which instruments, beyond cash and debt securities issued by central governments or central banks, may be utilised to meet this requirement. Accordingly, the EBA has released its draft Capital Endowment Guidelines.

2. Key Proposals

Eligible instruments:

The draft Capital Endowment Guidelines specify which instruments, in addition to cash and debt securities issued by EU central governments or central banks, may be used to meet the capital endowment requirement. In order to be eligible, the instruments must be available for unrestricted and immediate use to cover risks or losses as soon as they occur.

The proposed list of eligible instruments includes:

• debt securities guaranteed by the central governments of the EU or the European System of Central Banks (ESCB) central banks;
• debt securities issued or guaranteed by regional or local authorities of Member States (subject to certain conditions);
• debt securities issued or guaranteed by central, regional, or local governments or central banks of third countries with equivalent supervisory regimes and a 0% risk weight under the standardised approach under CRR; and
• debt securities issued or guaranteed by public sector entities, multilateral development banks, or international organisations that would receive a 0% risk weight under the standardised approach under articles 116(4), 117(2) and 118 of CRR.

In order to be eligible, all such instruments must be listed on a recognised exchange and be easily monetizable at any time, and must not be issued by the TCB’s head undertaking or its affiliates.

Operational conditions and segregation:

• To ensure the effectiveness of the capital endowment, the draft guidelines set out operational requirements, including:
• assets must be held in an escrow account in the host Member State and be free from encumbrances (except those ensuring their availability for resolution or winding-up);
• the market value of the assets must be easily determinable using widely available market prices;
• TCBs must establish and document arrangements, strategies, processes and mechanisms to meet their capital endowment obligations on a continuous basis;
• TCBs must monitor the geographical location, concentration risk, and currency denomination of the assets, ensuring alignment with the branch’s liabilities; and
• the assets used for the capital endowment cannot be double-counted towards liquidity requirements under Article 48f of CRD VI.

3. Implications

The introduction of a minimum capital endowment requirement for TCBs in the EU represents a fundamental shift from the traditional approach, where capital requirements applied only at the level of the head undertaking and generally did not apply to local branches.

While these guidelines will harmonise the types of assets TCBs can use to meet their capital endowment requirements, by imposing a local capital endowment requirement, the EU is moving away from exclusive reliance on the parent’s capital and supervision, towards a model that ensures local assets are available to meet local risks.

The introduction of the new mandatory capital endowment rules is likely to impose a notable operational burden on TCBs and their groups. TCBs will need to build up, allocate and maintain a dedicated pool of eligible assets and ring-fence these eligible assets in the EU. This may materially affect the TCB's funding and liquidity management practices, as well as their ability to transfer funds freely within the group.

According to the EBA’s draft cost-benefit analysis, TCBs operating in Member States without an existing capital endowment regime, or with regimes that differ from the new EU requirements, will face the direct cost of accumulating the required assets and the ongoing administrative burden of monitoring, valuing, and reporting on these holdings. There will also be additional complexity in ensuring that the assets meet the strict eligibility criteria—such as being unencumbered, easily monetisable, and not issued by related parties—and in managing concentration, currency, and geographical risks.

TCBs should review their current funding and liquidity arrangements and gap these against the draft Capital Endowment Guidelines in order to start planning for compliance with the new requirements and operational criteria.

3. Draft RTS on Cooperation and Colleges of Supervisors for Third-Country Branches (EBA/CP/2025/15) (the "Supervisory Cooperation RTS")

1. Background and Rationale

Article 48p of CRD VI sets out the requirements for cooperation and information exchange between competent authorities supervising third-country branches (TCBs) and subsidiary institutions of the same third-country group within the EU. It also establishes the framework for the creation and functioning of "colleges of supervisors" for those TCBs classified as class 1 under CRD VI.

Article 48p(7) of CRD VI required the EBA to specify, within an RTS, (i) the mechanisms for cooperation between competent authorities, (ii) the operational conditions for the establishment and functioning of colleges of supervisors for TCBs.

The aim of the Supervisory Cooperation RTS is to harmonise and strengthen the supervision of TCBs operating within the EU going forward, in particular by aiming to ensure comprehensive and coordinated supervision of third-country banking groups operating in the EU. Historically, the regulation of TCBs was largely left to national law, resulting in a fragmented supervisory landscape. The new framework seeks to address this by introducing minimum common requirements for authorisation, prudential standards, governance, supervision, and reporting, as well as a structured approach to supervisory cooperation.

2. Scope and Objectives

The Supervisory Cooperation RTS focus on two main areas:

Colleges of Supervisors for TCBs:

The RTS set out the mechanisms for establishing and operating colleges of supervisors for TCBs that are classified as class 1 under Article 48a of CRD VI.

These colleges are intended to facilitate comprehensive and coordinated supervision of third-country groups with significant EU presence, ensuring that requirements are not circumvented and that financial stability is maintained.

Cooperation and Information Exchange Outside Colleges:

Where a college of supervisors is not required (i.e., for less significant TCBs or where the criteria are not met), the RTS require competent authorities supervising TCBs and subsidiaries of the same third-country group to establish written arrangements for cooperation and information exchange.

3. Key Proposals

• Establishment of Colleges: The RTS set out when and how colleges of supervisors should be established for TCBs, focusing on “class 1” branches (those deemed systemically important or above certain asset/deposit thresholds). Members of the college include the competent authorities for class 1 TCBs and subsidiaries, as well as the EBA. Observers (such as authorities responsible for class 2 branches, AML/CFT, or resolution) may be invited as appropriate.
• Mapping and Membership: The lead competent authority (the authority of the Member State with the largest TCB by assets) must map the third-country group’s EU presence, identifying all relevant subsidiaries and branches, their importance, and the responsible supervisory authorities. This mapping is to be updated at least every three years or more frequently if there are significant changes. The lead competent authority is responsible for coordinating the college’s membership.
• Functioning of Colleges: The RTS detail the requirements for written coordination and cooperation arrangements, including information exchange, meeting frequency (at least annually), emergency planning, and the roles of members and observers.
• Information Exchange: The RTS specify the types of information to be shared, including financial data, governance arrangements, risk management arrangements, authorisation status, systemic importance assessments, and supervisory review outcomes. There are also provisions for sharing information on early warning signs, non-compliance, sanctions, and emergency situations.
• Emergency Coordination: Provisions are included for coordinated responses to crisis situations, including early warning indicators and communication protocols.
• Proportionality: Where no college is required (e.g. for less significant TCBs), the RTS require written cooperation arrangements between relevant supervisors to ensure effective oversight.

4. Implications

The new framework establishes detailed mechanisms for cooperation and information exchange between competent authorities supervising TCBs, and these proposals should lead to more structured supervisory cooperation across the EU. However, the effectiveness of such coordinated supervision remains to be seen, as it will depend on the willingness of those local authorities to collaborate constructively, and may instead lead to a more bureaucratic supervisory process.

TCBs and their groups can likely expect increased information requests and more coordinated supervisory engagement where they operate multiple branches or subsidiaries in the EU. The proposal for coordination may result in the competent authorities of smaller TCBs seeking to have supervisory scrutiny and influence over subsidiaries outside their jurisdiction, in another member state, and could result in conflicts between competent authorities, particularly if they have differing interpretations of their remit and supervisory roles across the wider third country group.

Conclusion and Next Steps

The EBA's consultation on these RTS and guidelines marks a major step in CRD VI implementation programmes. The proposals will have some significant operational, governance, and compliance implications for non-EU banking groups with EU branches, particularly those with large or complex operations.

Firms should review the consultation papers in detail, assess the impact on their EU operations, and consider submitting feedback to the EBA by the 10 October 2025 deadline. In the meantime, TCBs should begin preparing for enhanced supervisory expectations and compliance with the relevant RTS and guidelines.

For further information or assistance in responding to the consultation or preparing for implementation, please contact the Ashurst team.

Other author: Arnav Gupta, Associate.