Delayed by three months beyond the original January 10 deadline, this long-awaited reform addresses three key areas: (i) the conditions under which third-country banks may operate in France (see previous A&O Shearman article on EU law aspects); (ii) the strengthening of governance requirements, including the integration of environmental, social, and governance (ESG) risks into prudential supervision and governance arrangements; and (iii) new notification and approval requirements for M&A transactions involving credit institutions, Class 1a and Class 1b investment firms, and financing companies (sociétés de financement) (see previous A&O Shearman article on EU law aspects).
Third-country bank access: What changes for non-EU banking entities?
Under the existing French legal framework, because of the French banking monopoly rules, third-country bank branches were already required to be licensed by the Autorité de contrôle prudentiel et de résolution (ACPR) to provide core banking services (namely accepting deposits, lending, or providing guarantees and commitments) in France. Consequently, the CRD VI “branch requirement” has limited incremental impact. Similarly, while the French CRD VI Transposition includes a grandfathering clause preserving rights under contracts entered into before July 11, 2026, this provision is of constrained practical utility given this pre-existing regulatory framework.
However, the Ordinance introduces four highly relevant exemptions which, overall, faithfully transpose CRD VI:
- Interbank exemption: Core banking services may be provided between two banks, even where one is based outside the EU.
- Intragroup exemption: Core banking services may be provided between entities within the same group, even where one is established outside the EU.
- MiFID exemption: The branch requirement does not apply when third country banks provide core and non-core MiFID II investment services—it is noteworthy that the French CRD VI Transposition did not expressly implement the MiFID exemption in order to cover the provision of core banking services as “an accommodating ancillary service” to a core MiFID service (i.e., listed in Section A Annex I MiFID II).
- Reverse solicitation with follow-on right: No French branch is required where a French client (whether professional or retail) contacts the third-country bank on its own exclusive initiative. The bank may then also provide services that are “necessary for, or closely related to,” the initially solicited service, including where provided subsequently. Marketing of other products, activities, or services is expressly prohibited absent a licensed branch.
Of these, the interbank, MiFID (to some extent) and reverse solicitation exemptions are entirely new under French banking law. By contrast, the intragroup exemption was already available under Article L. 511-7, 4° of the French monetary and financial code (the French Financial Code), raising potential questions as to the articulation between the existing and new regime. To date,
no regulatory guidance has yet been issued on their interpretation.
By November 10, 2026 at the latest, third-country branches already licensed in France under the current regime must submit to the ACPR all information demonstrating their compliance with the requirements introduced by the French CRD VI Transposition in preparation for the application of the branch requirement from January 11, 2027.
Clarification and strengthening of governance requirements
The Ordinance clarifies and strengthens, on several points, the governance of credit institutions, financing companies (sociétés de financement), and (mixed) financial holding companies approved by the ACPR or European Central Bank (ECB).
Terminological clarifications impacting the requirements on management body and internal control functions
- The Ordinance adjusts several provisions of the French Financial Code to transpose the CRD VI clarification according to which members of senior management are not members of the management body (unlike the persons effectively directing the institution's business within the meaning of Article L. 511-13 of the French Financial Code who are part of the management body in its management function under CRD). As Book II of the French commercial code already provides for a definition of “senior management” (direction générale) that differs from that introduced by CRD VI, the Ordinance introduces into French law, where relevant, the literal definition of senior management set out in Article 3(1) (9) of CRD, to avoid any confusion between the two concepts of “senior management.”
- Several amendments introduced by the Ordinance are intended to replace the former concept of “risk management function” with the new concept of “internal control function” established by CRD VI, which encompasses the traditional “risk management” function, the compliance function, and the internal audit function. This terminological change makes it possible to apply to the latter two functions the same requirements that previously applied to the risk management function.
New obligations introduced in respect of internal control governance framework
- Credit institutions (with the exception of third-country branches (TCBs) to avoid any gold plating of CRD VI) must keep up-to-date individual records mapping the roles and responsibilities of each member of the management body and of each person responsible for the day-to-day management of the undertaking (i.e., each member of senior management within the meaning of Article 3(1)(9) of CRD).
- Risks related to crypto-asset exposures and the provision of crypto-asset services are added to the risks managed through the internal control framework of credit institutions.
- Members of the management body must receive training on ESG and IT risks.
Strengthening of requirements regarding notification of appointments and fit and proper assessments
- Introduction of an ex-ante notification obligation for the appointment of staff members holding the most significant responsibilities within “large” institutions. The Ordinance provides that “large” credit institutions and financing companies (sociétés de financement) will be required to notify the ACPR or the ECB on an “ex ante” basis of the appointment of their chief executive officers, deputy chief executive officers, effective directors, and chairpersons of the board of directors or supervisory board. The ex-ante notification must be made “as of the appointment” (prior to or at the time of the appointment) of the relevant staff members, and no later than 30 days before they take up their position. It is without prejudice to the existing ex-post notification requirement, which must be fulfilled by all institutions within 15 days of the appointment or renewal. The Ordinance, therefore, does not call into question the principle applicable under French law whereby the assessment of such appointments is carried out by the supervisor on an ex-post basis. The ex-ante notification is simply required to enable the supervisor to conduct a preliminary (non-binding) suitability analysis with a view to identifying any manifest and substantial compliance concerns. Only the final assessment carried out within two months of the ex-post notification is conclusive (the supervisor may still oppose the appointment at that time).
- Appointment and suitability assessment of key function holders. The Ordinance introduces and defines the concept of “key function holders” derived from CRD VI in a new Article L. 511-51-1 of the French Financial Code, specifying that the suitability of key function holders must be assessed by reference to their good repute, honesty, integrity, competence, knowledge, and experience. In accordance with CRD VI, the Ordinance strengthens the independence and powers of prudential supervisory authorities in overseeing appointments to key functions in banks, extending for this purpose the ex-post notification requirements to the appointment of key function holders.
- Possibility of requiring the creation of a local management committee in TCB. The Ordinance also strengthens the supervision of third-country branches by introducing the possibility for the ACPR to require the establishment of a local management committee, the role of which is similar to that of the executive board (directoire) or any other body exercising equivalent functions, and the members of which are subject to the same requirements as those applicable to persons effectively directing the institution's business within the meaning of Article L. 511-13 of the French Financial Code.
Introduction of new requirements regarding ESG risks
The Ordinance transposes the CRD VI requirements relating to the short, medium, and long-term (at least ten years) consideration by credit institutions and financing companies (sociétés de financement) of ESG risks and factors in their internal governance and risk management frameworks.
- The Ordinance accordingly provides that the entities concerned are required to incorporate coverage of ESG risks into their loss absorption frameworks and adds in this respect (with the exception, however, of third-country branches) two new substantive internal control requirements: (i) the obligation to prepare prudential “transition plans” describing the monitoring of financial risks arising in the short, medium, and long term from ESG factors; and (ii) the obligation to include ESG risks in the scenarios of the resilience tests (known as “stress tests”) they conduct.
- ESG considerations must also be included in internal strategies and policies approved by the relevant governance bodies. In particular, the institution's remuneration policy must take into account the institution's risk appetite in terms of ESG risks, and the remuneration committee is assigned the new task of assisting the management body in its supervisory function in implementing these adjustments.
- The Ordinance further specifies the powers conferred on the authorities in the context of supervising these ESG risks which will assess the content of the prudential transition plans prepared by the institutions and may require them to reduce the risks arising from ESG factors if necessary.
These new requirements complement, for the financial sector, the obligations under Directive (EU) No. 2022/2464, known as the “Corporate Sustainability Reporting Directive” (CSRD), regarding the disclosure of sustainability information by companies.
- Therefore, to ensure consistency between the information included in prudential transition plans and the transition plans required under the CSRD, the Ordinance transposes the consistency principle set out in Article 76(2) of CRD as amended by CRD VI, meaning institutions will not have to produce different data under comparable requirements.
- However, the Ordinance does not introduce amendments specifically transposing the CRD VI proportionality principle, which requires ESG measures to be proportionate to the scale, nature, and complexity of ESG risks. Under the French regime, proportionality already applies broadly to the setting-up of internal control arrangements and the ACPR has declared its rules comply with the EBA’s Guidelines (EBA/GL/2025/01) on the identification, measurement, management, and monitoring of ESG risks under CRD VI, as well as the prerequisites in terms of content and methodology expected of prudential transition plans.
Impact on future M&A transactions
The impact of CRD VI on future M&A transactions in the banking sector has been much anticipated by industry. With the French CRD VI transposition, there is now a clearer view of how the M&A regimes will differ from the existing regime.
- Acquisition or disposal of material holding: The new regime will require a prior notification to, and assessment by, the competent authority of any “supervised entity” (i.e., credit institution, financial holding company, or mixed financial holding company) acquiring a “material holding” in any entity. Disposal of such a holding requires notification only (with no assessment). There was no equivalent pre-existing regime under French law. As a consequence of the new CRD VI regime, the process for the acquisition or disposal of a qualifying holding will also be modified for harmonization purposes.
- Material transfer of assets or liabilities: The new regime will require a prior notification to the competent authority of any supervised entity involved in a material transfer of
assets or liabilities. Prior to CRD VI, only certain acquisitions of a significant business unit of activity (branche significative d’activités) were subject to a prior assessment or notification, which will be replaced by the implementation of the CRD VI regime (as Article L. 511-12-2 of the French Financial Code will be modified accordingly). - Merger or demerger: This new regime will require a prior notification and (subject to certain exemptions) an assessment of any transfer of all or parts of the assets/liabilities of a supervised entity into a single acquiring entity (merger) or one or more entities (demerger). There was no equivalent pre-existing regime under French law.
Next steps
The provisions of the Ordinance came into force on April 10, 2026 (with the exception of the third-country branch regime, which enters into force on January 11, 2027). The implementing Decree and related Ministerial Orders are expected in the coming weeks, which will provide further detail and constitute a comprehensive transposition package together with the Ordinance. The Decree is anticipated by late May, based on information we obtained from the French Treasury. Publication dates for the additional Ministerial Orders are yet to be confirmed.
