Non-EU banks need a branch in the member state to take EU deposits from 2027

Subject to the exemptions it carries, Article 21c of Directive 2013/36/EU will from 11 January 2027 require an undertaking established outside the European Union to set up an authorised branch in a member state before it may take deposits there, and before it may lend or issue guarantees there if it would qualify as a credit institution in the Union. The provision was inserted by Directive (EU) 2024/1619, the amending directive known in the industry as CRD VI, and published in the Official Journal on 19 June 2024. It reaches individual clients as well as corporate ones, which puts a question in front of investors who took residence in the bloc through an investment route and left their banking where it was.

What the article requires

Article 21c(1) obliges member states to require a third-country undertaking to establish a branch in their territory and apply for authorisation before it may commence or continue the activities set out in Article 47(1) in that member state. The obligation is territorial in a strict sense: the authorisation has to exist in the member state where the activity is carried on, not somewhere more convenient elsewhere in the Union. Article 21c itself sets no de minimis threshold and offers no notification route as an alternative to authorisation.

The duty falls on the third-country undertaking, not on its client. An investor who breaches nothing may still be affected, because the institution on the other side of the account may have to decide whether the relationship is worth an authorisation.

Three activities out of fifteen

Article 47(1) reaches two categories. The first is points 2 and 6 of Annex I to the directive — lending, including consumer credit and credit agreements relating to immovable property, and guarantees and commitments — but only where the third-country undertaking would qualify as a credit institution if it were established in the Union, or would meet the criteria in Article 4(1), point (1)(b) of the capital requirements regulation. The second is point 1 of Annex I, taking deposits and other repayable funds, and that limb applies to any third-country undertaking, with no institutional test attached.

Annex I lists fifteen activities. Payment services, foreign-exchange trading, portfolio management and advice, safekeeping and administration of securities, and safe custody are not among the three. Article 21c(4) then disapplies the branch requirement altogether for the services listed in Annex I, Section A to the markets in financial instruments directive, including any accommodating ancillary services such as related deposit-taking or the granting of credit or loans whose purpose is to provide services under that directive. New Article 47(2) carries the same carve-out.

A portfolio managed in Zurich or Singapore for a client living in Lisbon therefore does not fall inside Article 47(1) at all. The cash deposit sitting beside it, and the loan secured against it, are the questions.

One of the two dates has already passed

Member states apply Article 21c from 11 January 2027. But Article 2(1) of the amending directive brings one paragraph forward by derogation to 11 July 2026 — a date now seven weeks behind.

That paragraph, Article 21c(5), reads in full: “In order to preserve clients’ acquired rights under existing contracts, the requirement laid down in paragraph 1 shall be without prejudice to existing contracts that were entered into before 11 July 2026.”

The formulation is narrower than it first appears. It preserves acquired rights; it does not say in terms that every subsequent act under such a contract may continue without a branch. The directive defines neither what entering into a contract means for this purpose nor how far an acquired right extends.

Two different questions follow, and they are worth keeping apart. An amendment or a rollover raises whether a new contract has been entered into. A drawing under a facility agreed before the cut-off raises whether that drawing is an acquired right the paragraph protects. Neither is answered in the text.

An in-scope arrangement entered into on or after 11 July 2026 gets no protection from Article 21c(5), and has to be assessed against the main rule and its exceptions once that rule applies in January 2027.

Who this reaches, and what the directive leaves open

The clients described in the own-exclusive-initiative exemption are those established or situated in the Union — the directive’s wording, and it covers retail clients as expressly as professional ones. That phrase does the work of a territorial condition inside the exemption, and the directive nowhere defines what it means for a natural person.

The gap matters here. An investor whose residence permit is issued by one member state, whose home and family remain outside the Union and whose bank has never had an office in Europe is in a position the text does not resolve. Nothing in Article 21c states how much presence makes a person situated in the Union, and nothing states whether a residence permit alone does it.

The European Banking Authority has identified a separate but adjacent problem with the perimeter. In its report to the Parliament, Council and Commission under Article 21c(6), published in July 2025, the authority recorded that the banking services in Annex I are not defined at level one, and that national interpretations of deposit, repayable funds and granting credit vary between member states. It described the resulting absence of a harmonised external perimeter, together with limited data and difficulty in seeing how existing practices fit the exemptions, as obstacles to measuring what the regime will do. The authority did not recommend amending Article 21c, finding that the exemptions and carve-outs provide sufficient flexibility.

The exemptions, and how narrow the useful one is

Article 21c(2) carries three. The branch requirement does not apply:

• where the client is a credit institution;
• where the client is an undertaking in the same group as the third-country undertaking;
• where a retail client, professional client or eligible counterparty situated in the Union approaches the third-country undertaking at its own exclusive initiative.

Only the third is available to a private client, and two limits sit immediately beneath it.

The second subparagraph of Article 21c(2), which operates without prejudice to the same-group exemption, removes the initiative exemption where the third-country undertaking solicits the client through an entity acting on its own behalf or having close links with that undertaking, or through any other person acting on the undertaking’s behalf. The European Banking Authority drew the consequence in its report: marketing activity is incompatible with reverse solicitation.

Article 21c(3) then confines the initiative to what was actually solicited. It does not entitle the undertaking to market other categories of product, activity or service. Services necessary for, or closely related to, the one originally solicited stay outside the branch requirement, including where they are supplied later — but a request for a deposit account does not by itself let the bank go on to market a mortgage.

Ireland has put Article 21c into national law

Article 21c requires member states to give effect to the branch requirement through national measures. The European Banking Authority’s finding that member states read deposit, repayable funds and granting credit differently is a reminder that the same account may sit inside the perimeter in one state and outside it in another.

Ireland’s measure is on the books. The European Union (Capital Requirements) (Amendment) Regulations 2026, S.I. No. 326 of 2026, were given under the Minister for Finance’s official seal on 10 July 2026, with notice of the making published in Iris Oifigiúil four days later. Regulation 9L(1) carries the branch requirement in the two limbs of Article 47(1), referring to the same Annex I activities. Regulation 9L(8) carries over the grandfathering rule in the directive’s own words, including the 11 July 2026 date. Regulation 9J provides that Regulation 9L applies on and from 11 January 2027.

What to watch

Three things will decide how much of this an investor actually feels. Whether the member state in which the activity is carried on has transposed, and on what terms. What the institution does commercially — seeking an authorisation, moving the relationship to a group entity already licensed in the Union, or ending it are all possible responses, and each carries its own legal steps. And whether supervisors settle what being situated in the Union means for a person whose residence permit is real and whose presence is thin. Until that last question has an answer, an arrangement entered into on or after 11 July 2026 is worth taking apart in this order before 11 January 2027:

1. Identify the activity, since only deposits, lending, and guarantees and commitments are in scope at all.
2. For lending and guarantees, ask what the provider would be if it were established in the Union.
3. Establish where the activity is carried on.
4. Read the Article 21c exemptions against what is left.