CRD VI: a fund finance lender's guide to cross-border lending into Ireland

The Capital Requirements Directive VI introduces significant changes that directly impact fund finance lenders active in the Irish market.

Adopted by the European Union in July 2024, the directive, known as CRD VI, is part of the EU’s comprehensive implementation of the final Basel III reforms. It aims to bolster the stability of the financial system in Ireland and the EU more broadly.

In this article, Ogier's Dublin-based Banking and Finance team provide a thorough guide to CRD VI and explain how the directive is shaping fund finance in Ireland.

Key CRD VI changes relevant to fund finance lenders

The implementation of CRD VI introduces regulatory reform and operational changes  that lenders should be aware of:

• Regulatory capital requirements: lenders will face stricter rules for assessing and managing credit risk. For fund finance products - such as subscription line, NAV and hybrid facilities, lenders will need to conduct detailed due diligence on investor commitments and fund structures

• Large exposure limits: CRD VI imposes more stringent limits on exposures to single counterparties or related entities. To comply, lenders may need to syndicate or restructure transactions across multiple funds or sub-funds

• Environmental, social and governance (ESG) integration: lenders are required to integrate ESG risks into their credit decision-making and ongoing monitoring processes - this will likely increase engagement on ESG disclosures in facility documentation

• Reporting and transparency: enhanced reporting obligations will require more comprehensive disclosures concerning investor profiles, facility structures, and fund risk factors

• Establishment of an EU branch: certain non-EU (third country) lenders, banks and investment firms will be required to establish a regulated branch within the EU to continue providing core banking services

What activities trigger the branch requirement?

CRD VI sets out specific activities which, if carried out by non-EU lenders, will trigger the requirement to establish a branch within the EU. The main activities caught by the regime include:

• lending, broadly defined (including factoring and similar credit products)

• guarantees and commitments

• deposit-taking and other repayable funds

Which entities are subject to the branch requirement?

Any third-country entity that:

• takes deposits or other repayable funds from EU clients

• would be classified as a credit institution under EU rules if established in the EU and engages in lending or guarantees / commitments

This encompasses banks and may also include non-bank affiliates performing regulated lending if they meet the “credit institution” criteria.

Are there exemptions?

• reverse solicitation where the EU client initiates the relationship without lender solicitation

• intra-group transactions

• interbank lending

• ancillary banking services related to MiFID II investment services

• preexisting contracts entered before 11 July 2026

Each exemption is subject to interpretation and lenders should monitor forthcoming guidelines from the European Banking Authority (EBA) and national regulators closely.

Options for non-EU fund finance lenders

Apply for authorisation as a third-country branch

This is the default approach under CRD VI but may be less appealing in Ireland due to:

• lack of EU passporting rights (branches are authorised in only one member state)

• significant compliance burdens

• potential delays and complexity during authorisation

However, in jurisdictions like Germany or France where third-country branches are already common, this may simply extend existing obligations.

Establish an EU credit institution (subsidiary)

For institutions with substantial EU operations, forming a fully licensed EU credit institution (for example, in Ireland) may be optimal. This allows:

• passporting across the EU

• a stable long-term platform despite higher upfront costs and regulatory demands

Restructure lending through non-bank entities

Some lenders may transfer fund lending activities to related non-bank entities - such as special purpose vehicles (SPVs) or debt funds - that do not meet the definition of credit institutions.

CRD VI implementation timeline

• 10 January 2026: legal deadline for transposing the directive into domestic legislation

• 11 January 2026: CRD VI becomes operational, though certain transitional provisions delay application for third-country branches

• 10 July 2026: EBA is expected to publish guidelines detailing the branch authorisation process, documentation requirements, and approval conditions

• 11 July 2026: end of grandfathering period - any new core banking activities by third-country entities must comply with CRD VI or qualify for an exemption

• 11 January 2027: branch authorisation requirement takes full effect; non-EU lenders must obtain approval to continue providing regulated services in Ireland or other EU member states

Next steps for the CRD VI

CRD VI represents a transformative shift in the regulatory environment for cross-border lending into Ireland, particularly for non-EU fund finance lenders. Legal and regulatory guidance will continue to evolve as the EBA and Central Bank of Ireland release further details, and staying informed will be critical for market participants.

By understanding and preparing for the implications of CRD VI, lenders can turn this regulatory challenge into an opportunity to strengthen their market presence and operational resilience in Europe.

How Ogier can help

If you would like to discuss the potential impact of CRD VI on your operations or require tailored guidance on fund finance transactions, please get in touch with the members of our Fund Finance team below.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice