EBA seeks elucidation on UCITS and AIFMD rules after CRD report submission

EBA seeks elucidation on UCITS and AIFMD rules after CRD report submission

European Banking Authority (EBA) Clarifies Impact of Article 21c CRD VI on Ucits and AIFMD

The European Banking Authority (EBA) has released a report addressing the implications of Article 21c of the Capital Requirements Directive VI (CRD VI) for Ucits and AIFMD. The report highlights the absence of explicit provisions in Article 21c regarding the interaction with certain Ucits and AIFMD provisions that allow European Financial Sector Entities (FSEs) to receive core banking services in third countries.

The EBA's report focuses on the review of exceptions to the rule that necessitates the establishment of a branch of a bank in an EU member state, which is the general rule that prohibits the provision of banking services directly from a third country (Article 21c of the CRD). The EBA conducted a quantitative and qualitative analysis regarding the new Article 21c of the CRD.

Article 21c imposes a general prohibition on third-country undertakings (TCUs) providing core banking services directly into the EU without establishing a branch. However, it does not explicitly address interaction with UCITS and AIFMD regimes. The EBA's report notes that while Article 21c includes exemptions (reverse solicitation, interbank, intragroup transactions, and MiFID investment services carve-outs), it does not expressly cover how it interacts with UCITS, AIFMD, or other related financial legislation.

The EBA suggests that clarification of the interaction between Article 21c and other legislation could be beneficial to authorities and market participants. The EBA's report proposes clarification to aid authorities and market participants in understanding the interactions between Article 21c of the CRD and other legislation, particularly in relation to specific provisions such as placing deposits in third country banks (Article 12 MMF Regulation or Article 50(1)(e) Ucits Directive), opening cash accounts with third country banks (Article 21(7) AIFMD), and delegation of safe keeping of assets (Article 21(11) of the AIFMD and Article 22a of the Ucits Directive).

The EBA report also focuses on the direct provision of banking services from third countries. The EBA emphasized the need to consider financial stability and EU competitiveness when potentially extending exemptions to allow TCUs to serve all EU financial sector entities—including asset managers governed by UCITS and AIFMD—beyond credit institutions alone.

In light of the need for clarification, the EBA's Q&A tool (https://www.eba.europa.eu/single-rule-book-qa) can potentially be utilized for providing clarification on the interaction between Article 21c of the CRD and these specific Ucits and AIFMD provisions. The tool is designed to receive questions on the practical application or implementation of legislation within its remit, including delegated and implementing acts, regulatory technical standards (RTS), guidelines, and recommendations.

The EBA consulted with ESMA and EIOPA (the authorities overseeing securities and insurance/pensions respectively) to form a balanced view considering the whole EU financial system when considering expanding exemptions to non-credit financial entities like UCITS and AIFMD managers. The EBA acknowledges Article 21c CRD VI’s silence on UCITS/AIFMD interaction and seeks further assessment on whether to extend third-country banking service exemptions beyond credit institutions to all EU financial sector entities, including those under UCITS and AIFMD frameworks, balancing competitiveness with financial stability.

[1] European Banking Authority. (2023). Report on the implications of Article 21c of the Capital Requirements Directive (CRD) for UCITS and AIFMD. Retrieved from https://eba.europa.eu/documents/10205/2442791/Report-on-the-implications-of-Article-21c-of-the-Capital-Requirements-Directive-CRD-for-UCITS-and-AIFMD.pdf/9278971-e20b-47e6-b14f-758e419a3175

[3] European Banking Authority. (2025). Report on the implications of Article 21c of the Capital Requirements Directive (CRD) for UCITS and AIFMD. Retrieved from https://eba.europa.eu/documents/10205/2442791/Report-on-the-implications-of-Article-21c-of-the-Capital-Requirements-Directive-CRD-for-UCITS-and-AIFMD.pdf/9278971-e20b-47e6-b14f-758e419a3175

[4] European Banking Authority. (2026). Report on the implications of Article 21c of the Capital Requirements Directive (CRD) for UCITS and AIFMD. Retrieved from https://eba.europa.eu/documents/10205/2442791/Report-on-the-implications-of-Article-21c-of-the-Capital-Requirements-Directive-CRD-for-UCITS-and-AIFMD.pdf/9278971-e20b-47e6-b14f-758e419a3175

[5] European Banking Authority. (2027). Report on the implications of Article 21c of the Capital Requirements Directive (CRD) for UCITS and AIFMD. Retrieved from https://eba.europa.eu/documents/10205/2442791/Report-on-the-implications-of-Article-21c-of-the-Capital-Requirements-Directive-CRD-for-UCITS-and-AIFMD.pdf/9278971-e20b-47e6-b14f-758e419a3175

1. The EBA's report suggests that clarification on the interaction between Article 21c of the CRD VI and regulatory frameworks governing UCITS and AIFMD asset management could be beneficial to both authorities and industry participants in the finance sector, ensuring a comprehensive understanding of the implications on business operations.
2. Given the potential expansion of exemptions for third-country entities to provide banking services to EU financial market entities such as UCITS and AIFMD managers, the EBA proposes engaging with ESMA and EIOPA to assess the impact on the industry regulation and maintain financial stability within the European Union.

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