CRD VI: reshaping the EU banking landscape

The Capital Requirements Directive VI (hereinafter, CRD VI) is the latest evolution of the EU's prudential framework for credit institutions. Together with the Capital Requirements Regulation III (CRR III), it forms the EU Banking Package, completing the Basel III implementation in Europe and introducing structural reforms across market access, risk management, and governance.

In Luxembourg, the transposition is now complete: the Law of 5 May 2026 amending the Law of 5 April 1993 on the financial sector ((LSF) entered into force on 10 May 2026. This milestone has immediate practical consequences for institutions operating in or into Luxembourg. 

For risk and compliance functions, CRD VI is more than a regulatory update. It redefines how institutions access the EU market, embeds sustainability into prudential supervision and raises the bar on governance and individual accountability. 

CRD VI is built around three areas of strategic focus for risk and compliance teams:

• Third-Country Branches (TCB): a new harmonised regime governing how non-EU credit institutions provide core banking services into the EU, and thus into Luxembourg, with the CSSF now empowered to require branch establishment or conversion into a subsidiary.
• ESG Risk: environmental, social, and governance risks are now embedded into prudential supervision and internal risk frameworks as a binding obligation.
• Governance: strengthened fit-and-proper standards, internal controls, and accountability across credit institutions supervised by the national competent authority, and therefore by the CSSF in Luxembourg.