EBA final guidelines on instruments for third-country branch capital endowment requirement under CRD IV

The European Banking Authority (EBA) has published its final guidelines on instruments available for third-country branches (TCBs) for unrestricted and immediate use to cover risks or losses under Article 48e(2)(c) of the Capital Requirements Directive (2013/36/EU) (CRD IV). Under Article 48e of the CRD IV Directive, as amended by Directive (EU) 2024/1619 (CRD VI), an authorised TCB must maintain a minimum capital endowment at all times. Article 48e(2)(c) specifies that it may use for this purpose instruments that are available to the TCB for unrestricted and immediate use to cover risks or losses as soon as those occur. The EBA was mandated to issue guidelines on the instruments that can be used for this purpose.

Further to its July 2025 consultation, the EBA does not indicate any substantive changes from the initial draft guidelines apart from minor clarifications. The guidelines, as consulted on, specify that, in addition to cash and certain government debt already listed in the CRD IV, the most suitable financial instruments for the purposes of Article 48e(2)(c) are debt securities that would receive a 0% risk weight under the standardised approach for credit risk under the Capital Requirements Regulation (575/2013) (CRR) and that are issued or guaranteed by central, regional or local governments, or central banks, public sector entities, multilateral development banks or international organisations. In addition, to ensure that these other instruments are available for use for the purposes of Article 96 of the Bank Recovery and Resolution Directive 2014/59/EU (BRRD) in the case of resolution of the TCB and for the purposes of the winding-up of the TCB, the guidelines also specify the minimum operational conditions that third-country branches should respect. The guidelines will now be translated into the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations. The guidelines will apply from 11 January 2027.

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