Implementation of CRD VI – Bundestag resolves material changes to the banking law regime in German Banking Directive Implementation and Bureaucracy Relief Act (BRUBEG)

On 29 January 2026, the German parliament, Deutscher Bundestag, passed the Banking Directive Implementation and Bureaucracy Relief Act (Bankenrichtlinienumsetzungs- und Bürokratieentlastungsgesetz) (“Implementation Act”), adopting the version recommended by its Finance Committee (German draft).

As an omnibus act, the Implementation Act includes amendments to key provisions of German banking prudential law in order to implement Directive (EU) 2024/1619 (“CRD VI”) and is accompanied by targeted measures to reduce bureaucracy and increase the powers held by the Federal Financial Supervisory Authority (“BaFin”). The version adopted largely corresponds to the government bill published on 10 October 2025 (see our detailed insight on this topic).

The changes to the government draft are summarised below.

New regulatory framework for third-country branches remains unchanged

It appears noteworthy that the new and highly complex rules on harmonisation of the prudential regime for third-party branches within the European Union, which has been fragmented up to now, are taken up in the version of the Implementation Act now approved without any changes. This means that the licensing regime for companies domiciled in a third country (i.e. a country outside the EEA) that carry out cross-border banking transactions will be fundamentally changed. While such companies have generally been able to apply for an exemption under section 2(4) and 5 of the German Banking Act (Kreditwesengesetz) if certain conditions are met, in future there will be an explicit requirement to obtain a licence for CRD third-country branches, which will significantly modify the existing licensing regime under section 53 of the German Banking Act. Branches which either provide deposit services themselves or have what is known as a “head undertaking” that would be a CRD credit institution if it were domiciled within the EU are defined as CRR third-party branches if they provide lending and guarantee services (section 53c(1) of the Banking Act).

As provided in the bill, the companies affected by the new licensing regime will still be given some time to adjust to the new licensing requirements during a transitional period lasting until 11 January 2027 (section 64c(6) of the Banking Act).

New “fit & proper” requirements for governing bodies, supervisory boards and key function holders taken up

The Implementation Act also takes on board the proposals in the government bill on implementation of the CRD VI’s specifications on cross-EU harmonisation of requirements as to suitability (“fit and proper requirements”) of members of management bodies, supervisory bodies and more recently key function holders without any changes (for details see our insight).

Management of ESG risks

In the Implementation Act, the requirements to consider environmental, social and governance (ESG) risks provided for in the government bill are slightly lowered. This adjustment provides relief in particular for small and non-complex institutions, allowing them to describe their objectives and procedures in the specific plan for monitoring and managing ESG risks required in future (known as the ESG risk plan) in purely qualitative terms without the restrictive requirements set out in the government bill. Furthermore, in contrast to the bill, all institutions will no longer be required to notify the supervisory authority of the approval or significant changes to the now mandatory ESG risk plan.

No significant changes in relation to extended audit and reporting proceedings in strategic decisions/investment control

The new provisions on investment control and corporate restructuring of CRD credit institutions and mixed financial holding companies envisaged in the government bill remain practically unchanged in the adopted Implementation Act. As a result, the requirements for acquiring and selling material holdings, mergers, divestitures and transfers of assets and liabilities are harmonised in line with EU law and transparency, regulatory efficiency and risk prevention are significantly increased. There is just one insertion of a proportionality clause regarding the documents to be submitted in the event of mergers and divestitures (section 2i(1) of the Banking Act). This is evidently intended to account for the principle of proportionality recently emphasised by the legislature and the supervisory authorities. However, the new rules will still lead to significantly higher regulatory requirements for strategic measures which grant the supervisory authority preventive powers to review such measures and will have to be borne in mind when planning the timing of such measures, for instance.

Other changes

Compared to the government bill, the Implementation Act contains simplified rules for development and guarantee banks (section 2(9c) and (9i) of the German Banking Act). These banks will be exempted from reporting obligations in relation to details of ESG risks. Besides this, development and guarantee banks will be given preferential treatment in terms of risk weighting for equity exposure, which will remain at 100% without any further conditions needing to be met. This is to ensure that these banks can continue to fulfil their statutory mandate effectively even under the new own funds requirements.

Minor changes have been made compared to the government bill in the third sentence of section 25a(1) of the German Banking Act, where small and non-complex institutions are required to review strategies only every two years. Other institutions have to review their strategies regularly depending on the type, extent, complexity and scope of the risk in their business, but at least every two years, adjusting them if necessary.

Credit institutions were already no longer allowed to be operated in the legal form of a sole trader. Contrary to the government bill, where an amendment was intended to be made to section 2b(1) of the German Banking Act also prohibiting this for general partnerships, limited partnerships and partnerships limited by shares, the existing rule for credit institutions remains in place. However, as provided for in the government bill, the prohibition of this legal form will in future be extended to factoring and finance leasing, which may likewise no longer be carried on in the form of a sole trader (section 2b(2) of the German Banking Act).

In comparison to the government bill, the exceptions from the formal requirements for loans to members of management bodies in section 15(3) of the German Banking Act have been extended. While the government bill merely provided for an increase in the de minimis limit for loans to certain groups of persons that may be granted without any special resolutions to €100,000, such resolutions will not be needed for another group of cases in the future. The new privileged treatment applies to loans of up to €20,000, provided that the loans to members of management bodies are granted as part of a fully automated credit decision process and that the member’s relationship to the company has no influence on the terms of the loan. Furthermore, the exemption from such rules regarding loans to members of management bodies contained in the government bill for transactions other than loans has been defined in more detail by specifying that the requirements generally applicable to transactions involving members of management do not apply if the total value within the calendar year up to the date of the transaction does not exceed €100,000 (section 15(6) of the German Banking Act).

Apart from the changes outlined above, the Implementation Act also contains minor modifications and clarifications compared to the government bill, especially relating to the authorities’ internal procedures.

Concluding remarks

As was to be expected, the German Banking Directive Implementation and Bureaucracy Relief Act with its extensive new rules for third-party branches, the extension and harmonisation of governance requirements, the new requirements for investment control and other strategic matters, and the specifications for managing ESG will have enormous practical significance for credit institutions. However, the good news for such institutions is that the version of the Implementation Act adopted by the Bundestag does not contain any additional requirements, and in some areas even slightly reduces the requirements compared to the bill for reasons of proportionality. It will now be important for credit institutions to integrate the new rules into their internal processes without delay. There is not much time left for this because (provided the Implementation Act is promulgated by 31 March 2026) the main changes will become applicable at the start of Q4 2026.