11 September 2026
The EU's Capital Requirements Directive VI ("CRD VI") introduces new rules governing the provision of certain banking services into the European Union by non-EU institutions. The regime will apply from 11 January 2027 and will require market participants to assess more carefully how cross-border banking services are provided to EU-based counterparties.
In Ireland, CRD VI has been transposed through the European Union (Capital Requirements) (Amendment) Regulations 2026.
At the centre of the reforms is Article 21c of CRD VI, which establishes a harmonised framework for third-country undertakings providing certain "core banking services" within the EU. These services include:
For international lenders into aviation finance in the EU (including Ireland), the key question is whether the relevant activity falls within the scope of the new regime and, where it does, whether an exemption or alternative transaction structure is available.
The regime applies to third-country "credit institutions".
This concept captures not only traditional deposit-taking banks but also certain investment firms that meet specified regulatory thresholds under EU banking legislation.
As a result, a range of international financial institutions that currently participate in lending transactions involving Irish and other EU borrowers may fall within the scope of the new framework.
From 11 January 2027, a lender from outside the EU wishing to provide core banking services to EU clients will generally be required to operate through:
The distinction is important.
Branches are authorised at Member State level and generally conduct business within the jurisdiction in which they are established. By contrast, an EU-authorised subsidiary benefits from passporting rights and can provide services across the EEA from a single authorisation.
For some international banking groups, CRD VI may steer the group towards conducting European activities through EU subsidiaries rather than relying on cross-border booking models.
Ireland occupies a unique position as the global centre of aircraft leasing and aviation finance. Irish lessors and aviation platforms regularly access financing from a diverse lender base that includes US, UK, Asian and Middle Eastern financial institutions.
Given the international nature of the aviation finance market, Article 21c is likely to attract particular attention across the sector.
One practical effect of CRD VI may therefore be an increased focus on transaction structuring, lender onboarding processes and evidencing the basis upon which financing arrangements were initiated.
Certain exemptions to the third-country prohibition include:
The prohibition does not apply where the client approaches the lender exclusively on its own initiative.
While this exemption is expected to be interpreted narrowly, it may be particularly relevant in the aviation finance market. Financing processes are often initiated by lessors, airlines, sponsors, , financial advisers or borrower-mandated arrangers rather than through active marketing by lenders.
As a result, many transactions will require a detailed Article 21c analysis, but that analysis may often produce outcomes that allow non-EU institutions to continue participating in aviation financings involving Irish entities.
Nevertheless, reliance on reverse solicitation requires careful analysis and robust documentation. Any direct or indirect marketing activity undertaken by the lender may undermine reliance on the exemption, and institutions should maintain clear evidence demonstrating that the financing process originated with the borrower or its representatives.
The prohibition does not apply where a lender provides core banking services to another entity within its group.
Article 21c does not apply where core banking services are provided to another credit institution.
Accordingly, bank-to-bank lending and other inter-bank transactions generally fall outside the scope of the new regime.
Article 21c does not apply to investment services and activities listed in Annex I, Section A of MiFID II.
The precise interaction between this exemption and certain ancillary services remains uncertain and further regulatory guidance would be welcome, particularly in relation to complex structured finance and capital markets transactions.
Contracts entered into before 11 July 2026 benefit from grandfathering protection.
Lenders and borrowers should consider carefully whether subsequent amendments could be regarded as creating a new arrangement. Material increases in commitments, substantial amendments to facilities or significant maturity extensions may impact the availability of grandfathering.
While Article 21c introduces additional regulatory considerations, a number of options may remain available in addition to the exemptions listed above.
Article 21c applies to third-country credit institutions rather than all providers of capital.
Accordingly, appropriately established private credit funds, investment funds, and other non-bank lending vehicles may in certain circumstances fall outside the scope of the regime, provided they do not constitute credit institutions and are not engaged in deposit-taking activities.
For Ireland's aviation finance sector in particular, this trend may accelerate an evolution that is already underway, with private capital and alternative lenders playing an increasingly prominent role alongside traditional bank lenders, capital markets and export credit agencies.
The interaction between Article 21c and the syndicated loan market remains an important area of focus.
In many syndicated aviation financings, the borrower appoints an arranger to identify and approach potential lenders. Where the syndication process arises from a borrower-led mandate, this may support a broader analysis that the transaction originated with the borrower rather than through solicitation by participating lenders.
Although further regulatory clarification would be welcome, there are good reasons to expect that established syndicated lending practices can continue within an appropriate compliance framework.
Secondary loan trading and participation structures are also likely to require careful consideration.
Distinctions may need to be drawn between:
Traditional sub-participation arrangements may present a stronger argument that the participant is assuming exposure to the originating lender rather than providing lending services directly to the underlying borrower.
Some market participants may consider borrowing through non-EU entities as an alternative. In such circumstances, there will be a range of tax (including WHT), legal and other regulatory matters to consider.
Lending could be undertaken through an Irish Collective Asset-management Vehicle ("ICAV"), another investment fund structure or special purpose vehicle, provided that the entity does not engage in deposit-taking activities and does not otherwise fall within the definition of a credit institution.
As Article 21c applies only to third-country credit institutions, lending undertaken by appropriately structured non-bank vehicles may fall outside the scope of the prohibition, although the interaction of Article 21c with the AIFMD and UCITS frameworks remains subject to further clarification.
CRD VI represents an important change in the regulation of cross-border banking activity within the EU. For aviation finance participants, the introduction of Article 21c is likely to require additional deal-by-deal analysis whenever non-EU credit institutions provide financing or other core banking services to Irish or other EU entities.
Where debt facilities were in place before 11 July 2026, any available grandfathering will also need to be carefully managed by lessors.
The new regime should not be viewed as preventing non-EU institutions from continuing to participate in Irish aviation finance transactions. Many financings may either fall outside the scope of Article 21c altogether or benefit from one or more available exemptions.
In other cases, some changes to structuring, documentation or a lessor’s operational processes may allow for the new requirements to be met.
The principal challenge for lenders, lessors and airlines will therefore be ensuring that Article 21c considerations are identified and addressed at an early stage of the transaction lifecycle.
With appropriate planning and documentation, there is every reason to expect that Ireland's aviation finance sector will continue to access capital from the broad and international lender base that has underpinned its success for decades.
If you would like to discuss how CRD VI may affect your lending, financing or treasury arrangements, please contact Alex Walsh in KPMG Law.
If you would like to discuss how CRD VI may affect your lending, financing or treasury arrangements, please contact Alex Walsh in KPMG Law.
