The legal basis for the ECB’s scrutiny of banks’ cross-border business, however, may not be as clear as supervisors might like. First, as a Directive, CRD 6 must be transposed into national law before it can be binding for banks. The deadline for transposition is not until January 2026 (and it is not yet clear whether all EU countries will hit this deadline). Some banks may feel that ECB action is premature until the directive is transposed and the legal framework formally changed.
Even once CRD 6 has fully taken effect, there remains uncertainty about its precise effect. The legislation contains no explicit definition of ‘in’ the EU, creating some ambiguity about exactly what business is no longer permitted on a cross-border basis. For example, banking relationships with investment funds whose management has been delegated outside the EU, or with securitization vehicles that are EU-incorporated but contain non-EU assets, could arguably be considered as either EU or non-EU business. A court ruling may be needed to definitively settle the question: but this could take some years to arrive. In the mean time, the ECB is likely to take a maximalist approach, considering that all business with a European touchpoint will have to be conducted from an EU entity.