CRD VI Article 21c: new authorisation requirements for third-country lenders in the EU

Previous Swedish position: Under the previous Swedish legislation, third-country lenders could offer loans to Swedish companies without a licence or authorisation, provided that the lender did not both accept repayable funds from the public and regularly conduct lending activities. Sweden has therefore not had a prohibition on third-country lenders as such.

Article 21c: The Directive and the new Article 21c introduce a prohibition on third-country lenders (that is, lenders established outside the EEA) providing core banking services. Core banking services include, taking deposits and other repayable funds, lending, including consumer credit, credit agreements relating to immovable property, factoring, with or without recourse, financing of commercial transactions (including forfeiting), as well as guarantees and commitments. Taking deposits and other repayable funds is restricted for all third country undertakings. For lending, guarantees and commitments, however, the prohibition only captures third-country undertakings that would qualify as a credit institution (or a larger investment firm under Article 4(1)(1)(b) of the Capital Requirements Regulation) if established in the EU. Unregulated lenders, such as debt funds, insurers and non-bank corporates, therefore fall outside the scope of Article 21c, although local Member State licensing rules may still apply.[1] Going forward, a third-country lender wishing to provide core banking services in the EU will generally need to establish a branch or subsidiary subject to supervision in an EU country, or rely on one of the limited available exemptions.

Swedish implementation: On 3 June 2026, the Swedish Parliament decided to implement the Directive pursuant to Government Bill 2025/26:253. The Banking and Financing Business Act (Sw. lagen (2004:297) om bank- och finansieringsrörelse) will be amended, and new provisions on third-country branches providing core banking services will be introduced into the Special Supervision of Credit Institutions and Investment Firms Act (Sw. lagen (2014:968) om särskild tillsyn över kreditinstitut och värdepappersbolag). The Swedish legislative amendments generally entered into force on 1 July 2026, while the rules on special authorisation requirements and special supervision of third-country branches will enter into force on 11 January 2027.

Authorisation and supervision by SFSA: Third-country lenders wishing to establish a branch in Sweden must obtain authorisation from the Swedish Financial Supervisory Authority (SFSA, Sw. Finansinspektionen). Applications for authorisation to establish a branch submitted to the SFSA from 1 July 2026 will be assessed under the new provisions if they relate to a period beginning on or after 11 January 2027.

A branch must satisfy several requirements in order to obtain authorisation. These include sufficient capital and liquidity,[2] effective risk management, documentation and internal control[3], and authorisation in the third-country undertaking’s home country for the activities covered by the application. The SFSA will also assess whether the lender’s home country is able to exercise effective and satisfactory supervision. Additional requirements will apply to the day-to-day running of the business, including that it has two persons who effectively direct the business, with relevant experience and competence, as well as requirements relating to bookkeeping and accounting.[4]

The SFSA will supervise branches and monitor whether the business is conducted in accordance with the Special Supervision of Credit Institutions and Investment Firms Act and other applicable regulations.[5] Importantly, entities with existing authorisations will be required to apply for a new authorisation that complies with the Directive.[6] If a branch is, for example, considered systemically important or if the branch’s assets supersede a certain threshold, the SFSA is authorised to require its business to be carried on instead through a subsidiary holding the necessary authorisation.[7]

Exemptions: The main route by which a third-country bank may operate outside the prohibition is through a branch in an EU country. In Sweden, the branch must be authorised by, and subject to the supervision of, the Swedish Financial Supervisory Authority. Once such a branch has been established, the third-country lender may offer core banking services. In addition, Article 21c provides for a relatively narrow set of three exemptions and one carve-out, as set out below:

• Reverse solicitation: The reverse solicitation exemption applies where the customer contacts the third-country undertaking on its own initiative. It does not apply if the third-country undertaking, a person acting on its behalf, or a person with close links to it initiated the contact. The exemption covers only the service requested by the customer, together with services and products closely linked to that service, and does not extend to offers of other services or products.
• Services to credit institutions or larger investment firms: A third-country undertaking may provide core banking services to certain categories of credit institutions. These include banks and credit market companies under Swedish law, larger investment firms as defined in Article 4(1)(1)(b) of the Capital Requirements Regulation, and equivalent foreign undertakings.
• Group exemption: This exemption applies to undertakings in the same group as the undertaking established in a third country.
• Investment services: The prohibition does not apply where the third-country undertaking provides core banking services in connection with certain investment services and ancillary services. These include, for example, executing orders in financial instruments on behalf of clients, portfolio management, receiving and transmitting orders in relation to one or more financial instruments, and any related ancillary services.[8]

Grandfathering rights and lifecycle events: Article 21c and the Swedish statutory provisions implementing it enter into force on 11 January 2027. Agreements entered into before 11 July 2026 should generally fall outside the new rules and may continue to be performed with grandfathering rights, meaning provisions under which previous legislation continues to apply to those agreements, given no fundamental changes are made. Loan agreements entered into on and after 11 July 2026 will not benefit from grandfathering rights. However, such agreements are not caught until the rules begin to apply on 11 January 2027, but they must comply with Article 21c by that date.

If an agreement with grandfathering rights is renewed, amended, extended or supplemented in a way that gives rise to new obligations, this may result in the loss of the grandfathering rights and bring the agreement within the authorisation requirement. The Directive does not specify which events or lifecycle changes may cause grandfathering rights to be lost. However, the LMA’s position is that ordinary lifecycle events, such as a drawdown or a decrease of a credit limit permitted by the contract, are not expected to trigger the authorisation requirement. More fundamental changes to a grandfathered agreement may put those rights at risk, for example where a syndicate is added, the credit limit is increased, or an economically material amendment is made to the agreement.[9]

Looking ahead: Since non-bank lenders, such as private credit funds, insurers and asset managers, fall outside the scope of the Directive when it comes to lending and guarantee activity, demand for non-bank lenders may increase if third-country banks do not wish to establish a subsidiary or branch in the EU. This could, in turn, strengthen the position of private credit funds in the European market.[10]

Third-country lenders active in the Swedish and European markets should prepare their businesses for the change and be aware that the new authorisation requirement will apply in Sweden from 11 January 2027, while the framework implementing the other parts of the Directive entered into force on 1 July 2026. Grandfathering rights are granted to agreements entered before 11 July 2026. Third-country lenders should also be aware of the limitations on grandfathering rights, including that fundamental changes to existing agreements may result in those rights being forfeited.

[1] The CRD para 5 references to Annex I, points 1, 2 and 6 in Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/ECText with EEA relevance

[2] Prop. 2025/26:253, p. 214

[3] Prop. 2025/26:253, p. 217 ff.

[4] Prop. 2025/26:253, p. 219 f.

[5] Prop. 2025/26:253, p. 212 f.

[6] Prop. 2025/26:253, p. 207

[7] Prop. 2025/26:253, p. 225 f. & Article 48i CRD VI

[8] listed in Annex I, Section A in Directive 2014/65/EU

[9] LMA, p. 4 f

[10] Finance Newsletter Article 21c CRD VI for International Lenders – Bird & Bird, see 6. Competitive Opportunity for Private Credit