Where did grandfather go?

On the potential effect of the missing transitional regime in the Dutch draft CRD VI implementation

Introduction

In May 2025, the Dutch Minister of Finance publicly consulted its proposal for the implementation of the revised Capital Requirements Directive (CRD VI) into Dutch law. The draft proposal for the “Implementation Act Capital Requirements 2026” (Implementatiewet kapitaalvereisten 2026, hereafter referred to as the Draft Act) aims to implement the amendments introduced by CRD VI into the Dutch Financial Supervision Act (Wet op het financieel toezicht, Wft). This includes the infamous new third country branch regime (TCB Regime) (also see our previous blog on this topic here).

In the Draft Act, the Dutch legislator emphasises its intention to implement CRD VI in a ‘minimum burden’ (lastenluw) manner to avoid overregulation. However, there may be some unfortunate omissions looming in the current wording of the Draft Act which would have the opposite effect – especially the lack of the transitional regime for existing contracts of non-EU entities. This, amongst other topics, has been addressed by us in our reaction to the public consultation of the Draft Act (see here – only available in Dutch).

In this blog, I elaborate upon the potential effect of the lack of this transitional regime for non-EU banks and lenders.

The TCB Regime and existing contracts: what is happening?

In short, as noted in our previous blogs on CRD VI (see here and here), the TCB Regime requires third country (i.e. non-EU) providers of so-called ‘core’ banking services in the EU, also on a cross-border basis, to establish a branch office in the EU member state they are active in and apply for authorisation. The banking services to which the TCB Regime applies include (i) deposit-taking (i.e. attracting repayable funds), (ii) lending and (iii) providing guarantees and commitments – this blog focuses on services (i) and (ii).

The TCB Regime follows from Article 21c (and further elaborated upon in Articles 47-48q) CRD VI and will be implemented into Article 2:20 of the Wft. However, the proposed Article 2:20 Wft does not contain an important element that the TCB Regime as included in Article 21c(5) CRD VI does include: a grandfathering provision for existing contracts entered into before 11 July 2026.

The rationale of the Dutch legislator for this omission is that such transitional regime is not necessary in the Netherlands. According to the legislator, the Wft in its current form already includes an authorisation regime for third country branches. However, this argument seems to be based on a misunderstanding of the current Dutch rules and the impact of the new TCB Regime.

The current wording of Article 2:20 Wft only provides for an authorisation regime for non-EU banks that actually provide services from a branch office in the Netherlands. As such, this does not include the provision of banking services on a purely cross-border basis. This does not mean that non-EU banks or other entities are free to provide services to the Netherlands on a cross-border basis. For example, these parties still cannot provide loans to consumers without obtaining proper authorisation. They can also not attract repayable funds from the public without such proper authorisation. However, it is currently not prohibited for these non-EU parties to (i) provide loans to businesses or corporate borrowers or (ii) attract repayable funds from others than the public.

Below, I set out two examples where parties engaged in these activities may run into issues as a result of not implementing the transitional provision of the TCB Regime. Despite the position of the Minister of Finance, the existing requirements for third country branches as laid down in the current Article 2:20 Wft do not already cover these activities.

Practical example 1: non-EU lenders providing loans to non-consumers

A first practical example of how the lack of transitional arrangements for existing contracts may affect the banking market relates to the provision of loans to companies and businesses (i.e to non-consumers). Currently, the provision of loans to non-consumers such as Dutch companies (for example, a B.V. or N.V.) or to persons acting in their professional capacity currently does not require a license or other authorisation the Wft.

However, the new TCB Regime will cover these activities and require parties engaged therein to establish a branch and apply for proper authorisation. The lack of transitional arrangements for existing contracts of these parties may therefore have significant consequences.

For instance, a New York based lender may have provided a loan with a maturity of five years in 2023 (i.e. even before the adoption of CRD VI) to a Dutch B.V. on a cross-border basis without falling into scope of the Wft. However, if the transitional CRD VI regime for existing contracts is not implemented in the Draft Act, the lender will fall within scope of the TCB requirement for the remaining maturity of the loan.

Practical example 2: attracting repayable funds from others than ‘the public’

A second example pertains to deposit taking or attracting other repayable funds. Repayable funds may be any type of claim or loan where the nominal repayable amount is clear in advance (e.g. this does not just include savings accounts). This broad term therefore comes into play rather quickly.

Under the Wft, it is currently prohibited to attract repayable funds from the public in the Netherlands without being authorised as a bank. This applies to doing so from a local establishment as well as on a cross-border basis. However, the CRD VI TCB Regime does not refer to ‘from the public’. At first glance, one may wonder what effect the omission of three simple words may have. However, when given further thought it becomes clear that this omission may have significant consequences.

According to the parliamentary history accompanying the Wft, attracting repayable funds ‘from the public’ means – in short – attracting repayable funds from persons not including so-called ‘professional market parties’ (PMPs).[1]

Briefly put, PMPs may include (i) qualified investors (i.e. professional clients within the meaning of MiFID II, opt-up professionals and eligible counterparties), (ii) subsidiaries of qualified investors which are included in the supervision of the qualified investor on a consolidated basis, or (iii) a large denomination depositor, being a person whose initial deposit amounts to at least EUR 100.000.

As a practical example, a Swiss bank providing cross-border current account/deposit taking services to insurance companies in the Netherlands since 2021. Currently, this would not qualify as attracting repayable funds from the public, as insurance companies qualify as PMPs in the form of qualified investors. However, under the wording of the Draft Act, ‘from the public’ would not be included in the new Article 2:20 Wft and therefore no transitional regime would be available with respect to the bank’s existing clients. This means that the Swiss bank would be required to establish a branch in the Netherlands and apply for authorisation with respect to its deposit taking services.

As a side note, even if a transitional regime will be implemented it still must be made clear in the Draft Act that ‘from the public’ also applies to the TCB Regime. If this is not made clear, this would provide for several issues as discussed in our consultation reaction (see p. 2-5 thereof). For example, it could lead to an unlevel playing field between non-EU and EU parties.

Possible solutions: a quick fix or a second take from the legislator?

Considering the above, the Draft Act may require some reconsideration from the legislator. As it seems that the above has been addressed in multiple consultation responses, we hope the legislator will take these concerns into account in the further legislative process.

The issues also do not seem to go unnoticed amongst banks and other lenders. We are currently already seeing that non-EU lenders have become aware of the Draft Act’s omission to implement the CRD VI transitional regime for existing contracts. Some of these parties are even pausing or reconsidering their loans to Dutch corporates as a result of the uncertainty on this topic.

So, in the meantime, what can non-EU banks and lenders do to anticipate a potential lack of transitional arrangements for existing contracts? A possible solution may be to amend the existing contracts with additional termination clauses in case the contract becomes contra legem (i.e. in breach of applicable law). Another option is including assignment/transfer clauses for this situation. Nevertheless, these sorts of ‘quick fixes’ may still form unwelcome administrative burdens.

In any case, we will continue to advocate for the inclusion of the CRD VI transitional regime for existing contracts of non-EU parties. To be continued.

 

 

[1] This interpretation of ‘the public’ remains valid to this date as no EU-wide interpretation thereof has been established to date. The Minister of Finance assumed upon the introduction of the CRR that as long as a further interpretation at EU-level of the concepts such as ’the public’ has not yet been established, the logical route is to uphold the national interpretation thereof.