EBA publishes Report on direct provision of banking services from third countries

The European Banking Authority (EBA) has published a report on how banks from outside the EU offer services directly within the EU. Their analysis did not find enough reason to suggest changing the new Article 21c of the Capital Requirements Directive (CRD), which explains how core banking services should be offered in an EU country. However, the EBA believes it would be helpful to clarify how Article 21c works alongside other financial regulations, to support both authorities and market participants.

​The EBA considers that several factors make it difficult to measure the impact of the prohibition of direct provision of services from third countries set out in Article 21c CRD. At the same time, Article 21c of the CRD provides flexibility to EU financial sector entities that remain free to solicit core banking services from third country undertakings or may rely on services provided by third country branches or subsidiaries in the EU.

​However, the EBA notes that Article 21c CRD does not expressly address the interaction with the Undertakings for the Collective Investment in Transferable Securities (UCITS) and the Alternative Investment Fund Managers Directive (AIFMD), in particular those provisions entitling EU financial sector entities to receive core banking services for their ongoing operationality in third countries in accordance with their business model. The EBA suggests that additional clarification could also be provided via the EBA Q&A tool.