The European Banking Authority has published final guidelines setting out which financial instruments banks from outside the EU can use to meet capital requirements for their branches operating in EU countries.
The guidelines cover the “capital endowment requirement” for third-country branches under the EU’s Capital Requirements Directive (CRD) — the rulebook that sets prudential standards for banks across the bloc, the European Banking Authority (EBA) said in a statement on Monday.
It stressed the goal is to ensure the assets set aside at branch level protect local depositors or remain available to meet claims from local creditors if a branch is resolved or wound up.
Eligible instruments include financial instruments issued or guaranteed by central, regional or local governments, central banks, public sector entities, multilateral development banks or international organisations, provided they receive a 0% risk weight under the standardised approach for credit risk.
The guidelines also set minimum operational conditions that third-country branches must meet so that the instruments are available for “unrestricted and immediate use” to absorb risks or losses.
What the rules are based on
The EBA said its work follows provisions in Directive 2013/36/EU, including Article 48e, which lists forms of instruments that can be used and instructs the authority to specify requirements for “any other instrument” that can be used immediately to cover risks or losses.
The final text follows a public consultation held in 2025 on the proposed list of eligible instruments and the related operational conditions.
