The EBA publishes its final Guidelines on instruments for the capital endowment requirement for third-country branches

The European Banking Authority (EBA) today published its final Guidelines on instruments for the capital endowment requirement for third-country branches under the Capital Requirements Directive (CRD). The Guidelines set out the list of instruments that third-country branches may use to meet their capital endowment requirement and specify the minimum operational conditions that ensure these instruments are available when needed. The overall objective is to ensure that the capital endowment assets protect local depositors at the level of the third country branch, or they remain available to pay appropriate claims and satisfy local creditors in the event of resolution or winding-up of the third country branch.

To ensure that the capital endowment instruments are available to the third-country branch for unrestricted and immediate use to absorb risks or losses, the EBA has identified as eligible those financial instruments issued or guaranteed by central, regional, or local governments, central banks, public sector entities, multilateral development banks, or international organisations that would receive a 0% risk weight under the standardised approach for credit risk.

The Guidelines also clarify minimum operational conditions that third-country branches must meet so that the capital endowment instruments effectively serve their purpose and remain available in the event of resolution or winding-up of the third-country branch.

Legal basis and background

Article 48e(2) of Directive 2013/36/EU specifies the forms of instruments that could be used in the event of the resolution or winding up of the third-country branch, including 'any other instrument that is available to the third-country branch for unrestricted and immediate use to cover risks or losses as soon as those occur'. Article 48e(4) of Directive 2013/36/EU mandates the EBA to specify the requirements for such 'other instruments'.

These final Guidelines build on the public consultation conducted in 2025, during which the EBA collected feedback on the list of eligible instruments and the related operational conditions. They contribute to the consistent implementation of the new third-country branch regime introduced by the CRD.