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Prudential Requirements Reliefs for German Branches of US Banks

  • Writer: RA Dr. Hendrik Müller-Lankow, LL.M. (UCL)
    RA Dr. Hendrik Müller-Lankow, LL.M. (UCL)
  • Jan 19, 2024
  • 1 min read

Updated: Jan 22


US banks intending not only to run a representative office but to actively offer banking services in Germany generally require a BaFin license if they are not exempted for any particular reason. To obtain a BaFin license, the US bank can choose between establishing a German subsidiary or a German branch. In general, the full scope of laws applies in both cases but in case of a branch German law reliefs such branch from specific prudential rules laid down in particular in Regulation (EU) No 575/2013 (Capital Requirements Regulation, CRR).

Info: German branches operated by credit institutions situated in Japan or Australia benefit from respective rules.

Under the prerequisite that the credit institution is domiciled in the USA and is subject to the supervision of the Board of Governors of the Federal Reserve System or the Office of the Comptroller of the Currency, it can benefit from the following exemptions: in particular certain rules on CRR prudential consolidation, and the CRR capital requirements and leverage regime. However, reporting obligations on prudential requirements and financial information and disclosure requirements stay in effect, as far as they do not relate to exempted rules. Also the liquity and funding regime that requires institutions to hold sufficient liquid assets and stable fundings and to make respective reportings stay in effect. The CRR large exposures regime that contains special rules on monitoring and controlling such large exposures applies with the proviso that the consolidated equity of the credit institution group takes the place of the branch's own funds.

EU Secondary Sanctions

The EU has implemented specific secondary sanctions, thereby extending its existing sanctions regime.

 
 
  • ​Securities trading and services

  • Market infrastructure and custody

  • Fund administration and distribution

  • Payment and crypto services

  • Emissions trading system (EU ETS)

  • Anti-money laundering and Sanctions

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