From 11 January 2027, in order to provide core banking services in the EU, third-country undertakings will be required to establish a licensed branch in each EU Member State in which they provide core banking services or to operate through an appropriately authorised and/or passported EU entity. Third-country undertakings comprise non-EU banks and non-EU significant investment firms (which deal on own account and have assets exceeding €30 billion). For ease of reference, the term “non-EU credit institution” is used throughout this article to refer collectively to both categories of third-country undertaking.
The Irish transposing measures for CRD VI were signed into law on 10 July 2026 through the European Union (Capital Requirements) (Amendment) Regulations 2026 (S.I. No. 326 of 2026) (the Article 21c Regulations). This note is a debt finance-focused companion to our general CRD VI Guide for Financial Services and focuses on the impact of the Article 21c requirements on cross-border lending involving Irish companies and structures. It covers the Irish transposition approach, critical timing points, the key exemptions relevant to the loan market, and key syndication and secondary market scenarios. The aim of this note is to provide helpful initial guidance for non-EU market participants wishing to execute credit transactions in the Irish market or involving Irish borrowers.
Key takeaways
| No gold-plating: Ireland has implemented Article 21c through a faithful copy-out transposition. No additional requirements have been included. Timing: The “grandfathering” period ended on 11 July 2026 and the regime applies from 11 January 2027. Exemptions: Useful exemptions and structuring solutions are available and, depending on the fact pattern, there may be arguments that certain transactions are out of scope. Reverse solicitation: Is expected to be the most important exemption for debt finance transactions. Scope: In addition to new transactions, care is required for amendments, syndications and other secondary transfers involving in-scope non-EU lenders. |
Irish transposition of the Article 21c Licencing Requirement
What has changed?
The Article 21c Regulations introduce Ireland’s new third-country branch (TCB) regime, which will apply from 11 January 2027 (subject to certain reporting obligations already in force). The regime implements Article 21c of CRD IV, which generally prohibits non-EU credit institutions from providing core banking services directly into the EU unless they operate through an authorised branch or rely on an available exemption. In Ireland, those services comprise of: (i) deposit-taking; (ii) lending; and (iii) the provision of guarantees and commitments.
| Out of scope The Article 21c prohibition does not affect third-country lenders which are not non-EU credit institutions. Lenders that are not credit institutions including, in particular, most private credit funds, fall outside the scope of the prohibition entirely, regardless of whether they are lending to EU borrowers. For these lenders, Article 21c does not apply and no exemption needs to be established. |
Ireland’s approach
The Article 21c Regulations represent a faithful transposition of the European level directive with no gold-plating, and no additional Irish-specific requirements or restrictions. Although it is not expected to publish any formal guidance, as the domestic competent authority, the Central Bank of Ireland (CBI) is expected to adopt a practical and proportionate approach to implementation. As a result, firms will need to work from the text of the Article 21c implementing measures as market practice develops, together with any guidance that emerges at the European level.
A number of important questions remain open, including the scope of reverse solicitation, the meaning of services that are “necessary for, or closely related to” the original service, what constitutes carrying out a banking service “in the State”, and what constitutes “continuing” to provide such a service. Market practice will develop in each of these areas.
| Market implication Ireland’s copy-out approach will support consistency across Member States and avoid Irish-specific requirements. This will assist non-EU market participants operating on a pan-European basis. On the open questions (which are discussed further below), we expect market practice to develop quickly to facilitate the ongoing operation of the cross-border credit market. It is also possible that future EU level guidance may provide further direction for the market. |
Timing: Key dates and transitional period
Assuming the services are in scope, the application of CRD VI’s licensing requirements is determined by the date of the credit contract:
| Date/period | Event/milestone | Relevance for lenders/borrowers |
| Pre-11 July 2026 | Grandfathering cut-off date | Contracts entered into before this date are not subject to the licencing requirement – but monitor lifecycle events (see Grandfathering below) |
| 11 July 2026 – 11 January 2027 | Transitional period | Contracts entered into after 11 July 2026 are in scope from 11 January 2027; fully drawn loans vs. loans with ongoing commitments should be distinguished (see Syndication and Secondary Market Issues below) |
| 11 January 2027 | Remaining regulations begin to apply | Prohibition on provision of core banking services into EU takes effect. Non-EU credit institutions must operate through a TCB, an authorised EU subsidiary, or rely on an exemption or alternative structuring solution |
Loans contracted during the transitional period
The impact of CRD VI on loans contracted in the transitional period will largely depend on the terms of those loans and, in particular, when drawings can be made.
| Loan type/scenario | Position |
| Loan signed and fully drawn between 11 July 2026 and 10 January 2027 | Likely outside of scope: if the loan is fully drawn before 11 January 2027, no lending occurs after the implementation date and, therefore, no core banking service is provided |
| Revolving facility, delayed-draw facility or undrawn commitment signed between 11 July 2026 and 10 January 2027 | Potentially in scope: An undrawn commitment continues beyond 11 January 2027 and may involve the provision of commitments and lending after the regime becomes operative depending on whether the underlying contract benefits from grandfathering Each post-11 January 2027 utilisation should be analysed on its own merits |
| Pre-11 July 2026 contract that is subsequently amended in a material way | Grandfathering may be lost: Where grandfathering is lost, the arrangement may fall within scope if a core banking service is provided on or after 11 January 20271 |
| Drawdown after 11 July 2026 under a committed facility entered into before 11 July 2026 | Generally outside scope: There is a strong argument that grandfathering should be preserved where the relevant credit decision and commitment were established before the grandfathering cut-off date |
Exemptions and alternative approaches
Principal exemptions
The following exemptions may be available to non-EU credit institutions providing core banking services in an EU Member State, depending on the circumstances:
| Exemption | Summary |
| Reverse solicitation | Client approaches the non-EU credit institution at its own exclusive initiative |
| Inter-bank | Services provided to credit institutions |
| Intra-group | Services provided within the same group |
| MiFID investment services and related ancillary services | Certain MiFID services and ancillary activities |
| Grandfathered contracts | Contracts entered into before 11 July 2026 |
The licencing requirement may also be navigated on different grounds; including an analysis of whether or not the core banking service is, in fact, being provided “in the State”, and via structuring solutions, such as lending via unregulated entities or via debt instruments instead of loans.
Reverse solicitation
Reverse solicitation is likely to be the most significant exemption for the loan market and is potentially available across a broad range of debt finance transactions. Under the Article 21c Regulations, the licencing requirement does not apply where an EU client approaches a non-EU credit institution at its “own exclusive initiative” for the provision of a core banking service.
The structure of the syndicated loan market lends itself to a robust reverse solicitation analysis, and the exemption is expected to be widely used by market participants. Financing processes are typically initiated by the borrower and implemented through borrower-mandated arrangers, agents and other intermediaries, making reverse solicitation a likely feature of most deals in the market for non-EU credit institutions. While parties should be mindful of the parameters of the exemption (which we outline below) and how the market develops, reverse solicitation has the potential for broad application within applicable fact patterns.
Key limitations
Reverse solicitation is not available where a non-EU credit institution solicits a client “through an entity acting on its own behalf or having close links with such [non-EU credit institution] or through any other person acting on behalf of such undertaking”. These provisions are intended to prevent firms from circumventing the licencing requirement through affiliated entities, agents or other intermediaries.
The exemption is also subject to restrictions on cross-selling. A non-EU credit institution may not market other categories of services, activities or products to the client beyond those actively solicited by the client, except where those services, activities or products are “necessary for, or closely related to” the service, activity or product originally requested. The purpose of this restriction is to ensure that reverse solicitation cannot be used as a gateway for broader marketing activity.
A key exemption
Neither Article 21c nor the Irish transposing measures define reverse solicitation or provide detailed guidance on key concepts such as “own exclusive initiative”. Nonetheless, certain principles appear clear. Any element of marketing or solicitation by the non-EU credit institution itself, by affiliated group entities, or by agents or intermediaries acting for the non-EU credit institution that directly led to the origination of the loan may undermine reliance on the exemption. Equally, products or services that are clearly unrelated to the originally solicited transaction are unlikely to fall within the scope of the carve-out for related services.
However, if it can be demonstrated that the initial contact (Article 21c refers to “approach”) was made by the borrower (or its agent) and that the credit (and any other closely related banking services) ultimately resulted from that initial approach, reverse solicitation may very well be relied upon to take the transaction out of scope of Article 21c. Market practice on these points is still developing.2
| Reverse solicitation – Practical guidance 3 |
| When relying on reverse solicitation, market participants should consider the following: Document the client’s initiative A clear record demonstrating that the borrower (or its advisers and/or agents acting on its behalf) initiated the relationship will be central to evidencing any reverse solicitation analysis. Although market practice is still developing, parties should retain relevant correspondence and consider recording the initiation in board minutes, mandate letters and, where appropriate, transaction documentation (e.g. representations). Clearly delineate intermediary roles Where sponsors, arrangers, financial advisers or other intermediaries are involved, their roles should be clearly documented. Particular attention should be paid to identifying which parties they act for and ensuring that it is not implied that they are soliciting business on behalf of the third-country undertaking. Assess ancillary products at the outset Where additional products or services are to be provided, parties should consider whether those services can properly be characterised as being necessary for, or closely related to, the originally solicited service. The rationale should be documented as part of the transaction analysis. |
| Practical implication For many syndicated lending transactions, reverse solicitation is likely to be an important basis on which non-EU lenders serve Irish borrowers. The robustness of the reliance on the exemption will depend on the parties’ ability to evidence the borrower’s initiative and ensuring that neither the lender nor its affiliates have undertaken marketing or solicitation activities that directly lead to the origination of the loan and that could taint the analysis. |
What constitutes “in the State”: Characteristic performance
The authorisation requirement in Article 21c as implemented in Ireland is only triggered if the relevant banking services are being carried out “in the State”. Therefore, what constitutes carrying out a core banking service “in the State” is one of the more consequential open questions under the Article 21c framework in Ireland.
The CBI Brexit Guidance of 27 August 2019 remains the most relevant available indicator of how the CBI is likely to approach this question. Although issued in a different context, it indicates that the CBI may consider that the provision of services to Irish-based customers does not constitute banking business “in the State” where certain conditions are satisfied. Factors the CBI may take into account include:
- Whether the firm has a presence in Ireland (i.e. whether it is operating on a cross‑border basis)
- Whether there are marketing materials targeted at Irish based customers to inform them of the services provided by a credit institution authorised in another jurisdiction
- Having in place, or adapting, operational infrastructure or policies specifically to facilitate the provision of banking services to Irish‑based customers
- The volume of the Irish customer base (a material number of customers in Ireland availing of a banking service provided by a credit institution authorised in another jurisdiction is indicative of the conduct of banking business in Ireland)
- The classification of customer (a proportionally higher number of Irish‑based customers would tend to indicate that such customers are being targeted)
The CBI Brexit Guidance is not binding, but it is the best available guide to CBI thinking on perimeter matters at this stage. Applying similar parameters in the context of Article 21c, it might reasonably be concluded that a non-EU credit institution with no Irish branch or other infrastructure in Ireland, no marketing presence directed at Irish-based customers, and no material Irish customer base is not, as a matter of course, carrying on banking services “in the State”. However, in the absence of any Article 21c-specific guidance from either the CBI or at EU level, market participants should carefully consider the specific facts of each transaction and take legal advice before concluding that a transaction falls outside the scope of Article 21c on this basis.
Separately, a number of EU member states apply a “characteristic performance” test when determining where a regulated banking service is provided. Under this test, the service is treated as provided in the jurisdiction where the party performing the essential obligations is located, rather than where the borrower is situated. If this test were applied to lending to Irish borrowers, it would support an analysis that the core banking service is provided in the jurisdiction where the lender is established, not in Ireland, meaning the prohibition would not be triggered. Ireland has not traditionally applied such a characteristic performance test in the lending context because corporate lending has historically been subject to limited regulation in Ireland. This does not mean the test is unavailable going forward. It remains to be seen if this test will be adopted on a widespread basis in European markets and if such adoption will be tolerated by EU authorities.
Whether a robust characteristic performance argument is available in the Irish context will depend on the specific facts of the transaction. Factors that might be helpful in framing an argument that the banking service is not being provided in a Member State may include:
- The lender is established outside the EU and does not have an establishment in the EU
- The credit decision was made outside the EU
- The loan is booked and/or administered outside the EU
- The lender does not directly market within the EU
- The loan funds are sourced from outside the EU
- The loan funds are not paid to an EU bank account
- The borrower’s decision makers are outside the EU
- All discussions between the parties take place outside the EU
- The lender is not specifically aware of the jurisdiction of the borrower entity until relatively late in the negotiation process
Until the CBI or the European Commission issues guidance on this point, reliance on the characteristic performance test alone absent the availability of any other exemptions (e.g. reverse solicitation) or structuring solutions is not without risk. That said, fact-based arguments that the banking service (in this case, lending) is not being provided in Ireland are a helpful component in the overall analysis of whether Article 21c applies to a transaction.
| Practical implication Depending on the factual circumstances of the transaction, characteristic performance may support an argument that lending takes place outside Ireland and that the transaction is, therefore not within the scope of Article 21c. However, until the market develops further or further guidance is issued, it may be prudent to view characteristic performance as one factor within a broader analysis (including, e.g., an assessment of the availability of other exemptions such as reverse solicitation) rather than a standalone basis for concluding that Article 21c does not apply. |
Grandfathering
Contracts entered into before 11 July 2026 benefit from grandfathering protection and fall outside the new licencing requirement. While the grandfathering date has now passed, the exemption remains highly relevant to existing facilities. The key question for market participants is whether subsequent amendments, restructurings or other lifecycle events could result in the loss of that protection.
Practical implications
Amendments and restatements
Parties should exercise particular caution where changes are proposed to grandfathered facilities. Amendments that are material, such as increases in commitments, extensions of availability periods or extensions of maturity requiring lender consent, may jeopardise the availability of grandfathering protection.
Where a proposed amendment would result in the loss of grandfathering, this does not necessarily mean that the transaction falls within the scope of Article 21c prohibition. The grandfathering exemption and the reverse solicitation exemption operate independently of one another. If reverse solicitation can be established in respect of the relevant amendment or new transaction, it may remain outside the scope of Article 21c on that separate basis. Market participants should therefore consider both exemptions as part of any lifecycle analysis, rather than treating the loss of grandfathering as conclusive.
Drawdowns
By contrast, where a lender committed to provide credit before 11 July 2026, a drawdown made after that date may not result in a loss of grandfathering. A key question is whether the relevant credit decision and commitment were established before the grandfathering cut-off date.
Syndication and secondary market issues
Given the importance of the syndicated loan market to cross-border debt finance involving Irish borrowers, the interaction between the Article 21c requirements and both primary syndication and secondary market activity requires careful consideration. The following are the questions we are most frequently seeing in the market:
| Scenario | Key considerations |
| Syndication An Irish borrower mandates an arranger to market a loan and build a syndicate, which includes a non-EU lender. | The non-EU credit institution lender will be providing a core banking service to an Irish borrower and will require a basis for exemption from the Article 21c prohibition. Where the arrangement of the syndicated loan originates from the borrower’s appointment of the arranger, there is a strong basis for relying on reverse solicitation. Provided the borrower’s initiative can be traced through the arrangement mandate and syndication process, reverse solicitation should be capable of being relied upon by each participating syndicate lender. |
| Syndication optionality A lead bank that has committed to fund the entire loan but has discretion to syndicate or otherwise to arrange participation approaches a non-EU lender to participate in a facility involving an Irish borrower. | The non-EU credit institution will be providing a core banking service to an Irish borrower and will require a basis for exemption from the Article 21c prohibition. Reverse solicitation may be available, but the analysis will depend on whether the arranger is acting for the borrower, on its own behalf or for the non-EU credit institution. If the arranger is acting on its own behalf or on behalf of the lender, reliance on reverse solicitation may not be available and an alternative analysis may be required. |
| Transfer of a share in a syndicated facility to a non-EU lender An EEA lender (or an existing non-EU lender that benefited from grandfathering or the application of an exemption) transfers a commitment and/or share in a syndicated facility to a non-EU transferee following closing. | Different considerations apply depending on whether the transferred position is fully funded or includes an undrawn commitment. Where a fully drawn loan is transferred, the non-EU transferee is not extending new credit or lending to the Irish borrower and is therefore not providing a core banking service for these purposes. There is a strong argument that no separate exemption analysis should be required in respect of the drawn position. Where the transfer includes an undrawn commitment, the non-EU transferee will be providing a commitment to lend and may subsequently provide lending to the Irish borrower. In those circumstances, the transferee must be satisfied that, given all the facts and circumstances, it can rely on reverse solicitation. |
| Sponsor-led financing structure A non-EU private equity sponsor establishes an Irish fund or SPV and arranges financing from a non-EU lender. | The non-EU lender will be providing a core banking service to an Irish borrower and will require a basis for exemption from the Article 21c prohibition. Reverse solicitation may be available, depending on the capacity in which the sponsor acts. Where the sponsor is acting on behalf of the Irish borrower in sourcing financing and approaches the lender on that basis, there is a credible argument that the borrower is approaching the lender at its own exclusive initiative. |
| Sub-participations and risk participations A non-EEA bank enters into a sub-participation with a lender in respect of a loan to an Irish borrower. | The non-EU participant is generally providing a core banking service to the grantor lender rather than to the Irish borrower. The participant acquires an economic exposure to the underlying loan but does not become a lender of record and has no direct contractual relationship with the borrower. The Article 21c analysis therefore centres on the relationship between the participant and the grantor. If the grantor is an EEA credit institution, the inter-bank exemption will typically be available. If not, the participant will need to establish a separate basis for exemption. |
Concluding remarks
Our Debt Finance Group has extensive experience advising lenders, sponsors and borrowers on all types of cross border debt finance transactions and is leading on discussions involving the impact of the Article 21c requirements on clients’ transactions and their businesses more generally. Our Debt Finance Group works closely with our Financial Regulation Group to provide practical advice.
Please reach out if you would like to discuss further, we would be delighted to help.
For more general information on the third country branch regime in Ireland, including information on the establishment, authorisation and operation of a third country branch, please read our CRD VI Guide here: What does CRD VI mean for financial services in Ireland?
This document has been prepared by Arthur Cox LLP for general guidance only and should not be regarded as a substitute for professional advice.
1 The loss of grandfathering does not automatically engage the Article 21c prohibition. What matters is whether a core banking service is being provided to an EU borrower on or after 11 January 2027. Where a facility is fully drawn at the point of a break event and no further commitments or drawdown mechanics remain, the loss of grandfathering may have limited practical consequence, as the lender holds a receivable rather than an active lending commitment. By contrast, where the facility has undrawn commitments, or is amended in a manner that introduces or preserves future drawing mechanics, the loss of grandfathering is directly consequential: the lender will be providing a core banking service after 11 January 2027 and will need to establish an available exemption, such as reverse solicitation, or adopt an alternative structure.
2 In the meantime, and as referenced by the EBA, market participants are considering the reverse solicitation guidance available under MiFID and MiCA. However, given that those regimes differ fundamentally from the cross-border lending framework introduced by Article 21c, there is a credible basis for arguing that a different approach may be appropriate, particularly in respect of the MiCA guidance.
3 As required by CRD VI, the transposing measures have introduced the power for the CBI to require credit institutions and branches that are established in Ireland to provide the CBI with any information it considers necessary for the purposes of monitoring what services are being provided on a reverse solicitation basis into the State by other non-EU credit institutions within that entity’s group.
