On 22 August 2025, the German Ministry of Finance published the draft act, entitled the Bankenrichtlinienumsetzungs und Bürokratieentlastungsgesetz (BRUBEG), which implements EU Directive 2024/1619 (CRD6) in Germany. According to the corresponding statements by the German legislator, the draft act directly implements the requirements of CRD6, which means there will be less “gold-plating” and fewer German peculiarities than in past transpositions.
The draft act contains the requirements of Article 21c CRD6 harmonising market access by third-country undertakings, offering banking services to clients located in the EU. Since German regulatory law already provides for various forms of access to the German market, the expected changes to Germany’s regulatory landscape from the CRD6 implementation will mainly affect third-country undertakings relying on a waiver from the licence requirement in Germany.
The public consultation period will end on 9 September 2025.
The following article summarises the BRUGEG draft act.
1. Requirement to establish an authorised branch
Article 21c CRD6 will be implemented in new sections 53c and 53cc of the German Banking Act (KWG). In future, third-country branches (TCBs), which provide the "core-banking services" (i.e. deposit-taking, lending or guarantees and commitments) will be subject to the new TCB regime in the KWG. In legal terms, TCBs within the meaning of the CRD6 will qualify as CRD-Drittstaatenzweigestellen.
Notably, rather than referring to German law concepts, the draft act defines the core-banking services by way of reference to Annex I nos. 1, 2 and 6 of the CRD. As a result, it remains unclear what will constitute lending, deposit-taking and the issuance of guarantees (e.g. the CRD does not even define a “deposit”) in light of BaFin’s administrative practice on the interpretation of lending, deposit-taking and guaranteeing in Germany, which is not always fully in line with the CRD. Since this approach might cause ambiguity in the market, this should be clarified as the draft legislation is revised.
As a result of the new requirements, third-country undertakings will not be allowed to provide core-banking services on a cross-border basis into Germany, unless an exemption applies.
2. Exemptions from the licence requirement
a) Reverse solicitation
There is no explicit implementation of Article 21c (2) point (a) CRD6 in the draft act. Reverse solicitation and its general principles, however, are recognised and follow from BaFin’s longstanding administrative practice. Therefore, the lack of express implementation does not mean that reverse solicitation as an exemption from the requirement to establish a TCB will not be available. It is expected that the general reverse solicitation principles (as supplemented by Article 21c (2) and (3) CRD6) continue to apply. This is also expressly recognised in the legislative reasoning.
b) Inter-bank exemption
Article 21c (2) point (b) CRD6 is not explicitly implemented in the draft act. There is no general concept in German law whereby the provision of banking services to other banks is exempted from the licensing requirement. It is, however, recognised by BaFin in its longstanding administrative practice particularly regarding deposit taking and lending business. The legislative reasoning also seems to consider the existence of such an inter-bank exemption. This exemption is also expected to apply.
c) Intra-group exemption
There is also no explicit implementation of Article 21c (2) point (c) CRD6 in the draft act. While there is an intra-group exemption in Section 2 KWG (i.e. Konzernprivileg) now, it only applies to the licensing requirement for credit institutions and financial services providers. It remains to be seen whether a similar exemption in relation to the requirement to establish a TCB will be included in the law.
It is worth noting that the limitation of activities of a TCB to Germany will not apply for intra-group financing transactions with other TCBs of the group (Section 53cc (5) no. 1 KWG).
d) MiFID exemption
The requirement to establish a branch will not be applicable if the third-country undertaking provides investment services listed in Annex I, Section A, of Directive 2014/65/EU (MiFID II), including any accommodating ancillary services (Article 21c (4) CRD6). This exemption will be implemented in a new Section 53c (1) sentence 2 KWG. There is, however, no further guidance on how to interpret this exemption. It remains unclear, for example, what qualifies as an ancillary service in this sense. The draft act only mentions the related deposit taking or the granting of credit or loans for the purpose of providing MiFID investment services.
The wording (lediglich) of the draft act also suggests that the MiFID exemption will only apply to such TCBs that exclusively provide the referred MiFID investment services. This is in line with the EBA Report on the provision of services of third-country undertakings (EBA/REP/2025/21), which means that the provision of ancillary services on a standalone basis (i.e. not linked to a MiFID investment service) will not fall within the scope of the MiFID exemption.
e) Grandfathering
The draft act does not seem to provide for an explicit grandfathering rule in the sense of Article 21c (5) CRD. While the legislative reasoning recognises the existence of grandfathering rights, the scope of such grandfathering is uncertain. BaFin is expected to address this issue when revoking existing waivers under Section 2 (5) KWG (see below).
To the extent the scope of the exemptions from the licence requirement is unclear, these uncertainties should be addressed in the revision of the draft law.
3. Waivers
A direct consequence of the new requirement for TCBs is the partial discontinuation of cross-border licensing waivers under Section 2 (5) KWG, which are currently used by many international banks for their access to the German market. BaFin will have to revoke these waivers to the extent they relate to the provision of core-banking services, whereas third-country undertakings operating on waivers for non-core banking services (e.g. custody) or MiFID investment services should continue to be able to rely on them. This means that BaFin may have to assess whether and to which extent existing individual waivers relate to core or non-core banking services.
4. Authorisation requirement and ongoing supervision
TCBs will require authorisation from BaFin if they engage in core-banking services commercially or to an extent that requires a commercially oriented business organisation in Germany. TCBs under Section 53c KWG, however, will not be considered as credit institutions within the meaning of the KWG. The German legislator apparently does not intend to make use of the option to regulate TCBs in the same way as local credit institutions. This means that no stricter rules will apply for TCBs than provided for under CRD6. This is in line with the intended direct “1:1” implementation of CRD6 in Germany.
The specific requirements for TCBs are stipulated in Section 53c et seqq. KWG, implementing Article 47 et seqq. CRD6, whereas only certain provisions of the KWG will apply to TCBs.
The licence may only be granted to a TCB if the requirements pursuant to Section 53cc (4) and 53cd KWG are fulfilled. These substantive requirements encompass:
- capital requirements (depending on whether it is a class 1 or 2 TCB);
- liquidity requirements (unencountered and liquid assets must be sufficient to cover liquidity outflows over a minimum period of 30 days);
- requirements in relation to the internal governance (e.g. two directors located in Germany);
- reporting requirements (e.g. information on assets and liabilities booked by the TCB).
BaFin will be able to waive the licence requirement for third-country branches that have obtained their licence by 10 January 2027 to the extent that the TCB complies with the substantive requirements set out in sections 53ca to 53cq KWG. It will remain to be seen what impact this will have in practice and to which extent BaFin will make use of this option.
Furthermore, there seems to be no deviating requirements in the draft act regarding the power of BaFin to require the establishment of a subsidiary rather than a branch under Article 48i CRD6.
Whether TCBs will also need to comply with the BaFin Minimum Requirements for Risk Management (MaRisk) remains open. As of today, German branches of foreign banks within the meaning of Section 53 KWG are in scope, whereas branches within the meaning of Section 53c KWG (i.e. operating under the EU passport) are out of scope of MaRisk.
5. Next steps
The relatively short consultation period for the draft act will end on 9 September 2025. The subsequent government draft is expected at the end of Q3 2025, after which the draft will be debated in the German parliament. Since the new legislation is set to take effect for the most part on 11 January 2026 in line with the EU-wide CRD6 implementation schedule (whereby third-country undertakings will not need to comply with the Article 21c CRD6 requirements until 11 January 2027), the final implementation act will need to be published by 10 January 2026 at the latest.
We expect the implementation law to be passed by the end of 2025.
For more information on the German draft act implementing CRD6 and how this could impact your business, contact your CMS client partner or the author Moritz Gestmayr.
