11 January 2027: The end of direct cross-border banking into Sweden for non-EU banks

Where we are now

CRD6 (Directive (EU) 2024/1619) amends the Capital Requirements Directive and introduces a common EU regime for branches of third-country credit institutions. Most of that regime already applies. The remaining step is the branch requirement for core banking services, which applies from 11 January 2027, and will be implemented through amendments to the Swedish Act (2014:968) on Special Supervision of Credit Institutions and Investment Firms (Sw. lag (2014:968) om särskild tillsyn över kreditinstitut och värdepappersbolag). 

What happens on 11 January 2027?

From 11 January 2027, Article 21c of the Capital Requirements Directive, as implemented in Sweden, will require a third-country undertaking that wishes to commence or continue taking deposits, lending or issuing guarantees and commitments in Sweden to establish a branch in Sweden and obtain authorisation from Finansinspektionen. Alternatively, the services may be provided through an EU subsidiary. Banks currently serving Swedish clients directly from outside the EU, without an applicable exemption, will need to have a compliant structure in place by that date.

Timeline

From 11 January 2027, the branch requirement applies. Transitional relief covers only contracts concluded before the cut-off date of 11 July 2026. Accordingly, the branch requirement does not affect the performance of those existing contracts.

Three points to check now

1. Transitional relief is closing in

Transitional relief covers only contracts concluded before the cut-off date. New business after that date cannot rely on it. Non-EU banks should inventory existing contracts with Swedish clients and confirm which, if any, fall within the relief. Any new deposits, loans or guarantees will need a compliant structure or an applicable exemption.

2. No passport

Authorisation of a Swedish branch covers activities in Sweden only. The branch may not offer its services cross-border to clients in other Member States, except for intragroup funding with other branches of the same head undertaking and reverse solicitation. Banks with clients in several Member States will need to consider their structure in each of them.

3. Narrow exemptions

The branch requirement does not apply to: (i) reverse solicitation, where the client approaches the bank at its own exclusive initiative; (ii) services provided to credit institutions or corresponding foreign entities; (iii) intragroup transactions; and (iv) MiFID investment services together with closely related ancillary services. Reverse solicitation is interpreted strictly and should not be relied on as a business model. Each exemption should be tested against the actual business line and client relationship, and the analysis documented.

Authorisation takes time

If a Swedish branch is needed, an application must be made to Finansinspektionen. Under the European Banking Authority’s Guidelines on authorisation, the application must include a non-opposition statement from the head undertaking’s home supervisor. The branch must also meet minimum requirements, including on capital endowment, liquidity, governance and booking arrangements. Given the time left, non-EU banks should plan for contingencies if authorisation is not in place by 11 January 2027.

What to do before 11 January 2027

• Map your services: Identify which deposit, lending and guarantee services are provided to clients in Sweden, and from where.
• Test the exemptions: Assess whether reverse solicitation, the credit institution exemption, the intragroup exemption or the MiFID carve-out genuinely applies to each business line and client relationship, and document the analysis
• Check transitional relief: Identify which existing contracts were concluded before the cut-off date and which new business needs a compliant structure.
• Act on authorisation now: If a Swedish branch is needed, prepare the application promptly, including the non-opposition statement from your home supervisor, and put contingency arrangements in place.

Less than three months to 11 January 2027. Contact our Banking & Finance team in Stockholm to assess your set-up.

How we can help

The Banking & Finance team at Eversheds Sutherland in Stockholm advises international banks and financial institutions on Swedish licensing, structuring and regulatory compliance, including applications to and dialogue with the Swedish Financial Supervisory Authority.
Sources and important notice

Sources: Directive (EU) 2024/1619 (EUR-Lex); EBA publications on third-country branches. This article is for general information only and does not constitute legal advice.