New regulatory requirements for third-country undertakings operating in Sweden

The Swedish government has published the proposed legislative changes needed to implement the EU’s banking package, including harmonised regulatory requirements for third-country branches providing certain banking services. In this article, we provide an overview of the new EU framework regarding third-country branches, Sweden’s planned implementation, and how third-country companies providing relevant banking services in the EU can prepare for the new regulations.

A new framework for third-country branches

Branches of non-EU undertakings located in the EU, so-called third-country branches, are currently not subject to harmonised EU financial regulations. However, Directive (EU) 2024/1619 (“CRD VI”) creates a harmonised regulatory framework for third-country branches providing core banking services in the EEA. On 30 May 2025, the Swedish Ministry of Finance published its proposal for transposing CRD VI into Swedish legislation, as outlined in the memorandum “EU:s bankpaket” (available – in Swedish – here) (the “Proposal”). The Swedish government proposes that the CRD VI rules for third-country branches are transposed into Swedish legislation through a minimum harmonisation approach. The Proposal adheres closely to the directive’s requirements, without introducing national gold-plating. It should be noted, however, that the Swedish government has chosen not to make use of certain optional exemptions available under the directive. This includes, among other, the possibility to exempt existing third-country branches from the requirement to apply for authorisation pursuant to the new regulations, meaning that current authorised third-country branches must reapply for authorisation pursuant to the new regulations.

New requirements for authorisation

The Proposal includes a new licensing requirement for undertakings established outside the EEA, who either intend to provide certain banking activities, including lending and issuing guarantees and commitments, and would have been deemed credit institutions or certain securities companies had they been established in the EEA, or intend to accept repayable funds from the public in Sweden.

Although the new regime introduces a general requirement for authorisation, certain exemptions will apply. Most notably, authorisation will not be required where services are provided solely at the initiative of the Swedish client (reverse solicitation), without any prior marketing or solicitation by the third-country company or any third party acting on its behalf. In addition, authorisation will not be required where the third-country undertaking exclusively provides services to other entities within the same consolidated group or to credit institutions and certain larger securities companies. Lastly, certain services directly related to services covered by Directive 2014/65/EU (“MiFID II”) will also be exempt from the authorisation requirement.

The Proposal sets out eight requirements that must be fulfilled for the third-country branch to be granted authorisation by the Swedish Financial Supervisory Authority (“SFSA”):

The third-country branch satisfies the applicable capital and liquidity requirements.
The third-country branch satisfies applicable standards on internal governance and risk management.
The third-country branch may only conduct the authorised activities within Sweden (the Proposal includes, in line with CRD VI, an explicit prohibition on offering or conducting those activities in other Member States on a cross-border basis, except for intragroup funding transactions).
The activities that the third-country undertaking seeks authorisation for in Sweden are covered by the authorisation that the undertaking holds in the third country where it is established and are subject to supervision in that third country.
The home country supervisor exercises adequate supervision and has been informed of the undertaking’s intention to establish a branch in Sweden.
The SFSA assesses that it will be able to exercise effective supervision over the Swedish branch.
There are no reasonable grounds to suspect that the third-country branch would be used to commit or facilitate the commission of money laundering or terrorist financing.
Deposits with the third-country branch are covered by the Swedish deposit guarantee scheme (or a foreign equivalent).

The Proposal also sets out detailed requirements concerning the organisation and governance of the third-country branch. For example, each branch must appoint at least two managing directors who are residing in Sweden and who are collectively responsible for the branch’s operations.

Furthermore, the SFSA will have the power to require that a third-country undertaking, rather than providing its services through a branch, establishes a Swedish subsidiary if the branch’s operations may have serious consequences for the financial stability and other mitigating actions are deemed insufficient.

Timing

The proposed provisions concerning third-country branch authorisation will enter into force on 11 January 2027. However, the new provisions will apply to branch licence applications submitted to the SFSA after 11 January 2026, where the operations will commence after 11 January 2027. The licensing requirement will apply to agreements entered into after 10 July 2026, where they give rise to new obligations.

The Proposal is now being circulated for consultation. The deadline for submitting comments on the Proposal is 15 September 2025. Once comments received during the consultation have been processed, the Swedish government will submit a draft government bill to the Council on Legislation. This draft government bill may be expected to be published during Q4 2025.

What should third-country undertakings do now?

Although the regulations set out in the Proposal are not expected to enter into force until 11 January 2027, third-country undertakings currently serving Swedish clients, or planning to enter the market, may want to assess the effects of the proposed regulations. In particular, we recommend assessing whether the current or planned activities trigger the licensing requirement under the proposed framework and, if so, consider whether establishing a branch or a subsidiary in Sweden (or in another EEA country) is the appropriate measure or if structural or other changes to its current operations could effectively address the new requirement without the need to apply for a licence.