At first glance the subject appears highly technical. Yet it carries significant implications for financial centres, particularly for Frankfurt. With the sixth EU Capital Requirements Directive, Capital Requirements Directive VI (CRD VI), EU banking regulation takes another step forward. The directive, which has applied since 11 January 2026, tightens the requirements regarding the operational substance of third country banks. These are institutions that provide core banking services within the EU while maintaining their headquarters outside the EU. For international banks this means that business models, governance arrangements and staffing decisions must be anchored more firmly within the EU than before. Within the industry CRD VI is therefore already being described as a “mini Brexit”.
A justified comparison
The comparison is justified when considering the directive’s likely effects. Much like Brexit, CRD VI forces banks to reassess decisions concerning locations, responsibilities, staffing and the place where value creation occurs. Institutions headquartered outside the EU that have so far operated through relatively lean subsidiaries or branches face particular pressure.
Supervisory authorities will expect stronger decision making authority, more robust risk management and a greater capital presence within the EU. Structures often described as letterbox entities are intended to disappear. Estimates suggest that roughly one thousand additional jobs and around three hundred billion euros in assets could be relocated to financial centres within the EU as a result.
For Frankfurt this development represents both an opportunity and a challenge. After Brexit the city already benefited from the reorganisation of financial activities. Around sixty financial institutions shifted parts of their business operations to Frankfurt. Approximately 9,500 jobs were created directly in banks, with many additional positions emerging in advisory and professional services. Many institutions selected Frankfurt primarily as their regulatory base while maintaining key functions in London. CRD VI now addresses precisely this type of arrangement.
Implementation will be decisive
For Frankfurt the decisive question is whether the city will succeed in attracting the full potential of additional jobs and assets.
In the period following Brexit Frankfurt initially emerged as a clear winner in the competition with other financial centres in the EU, such as Paris, Amsterdam and Luxembourg. Over time, however, some decisions that had originally favoured Frankfurt were partly revised and shifted towards competing locations within the EU.
Several factors contributed to this development. Administrative procedures for work and residence permits often progressed slowly. The availability of qualified professionals, particularly in securities trading, remained limited. In addition, supervisory authorities were unsettled for a time following the Wirecard scandal. The key question now is how Frankfurt will perform under the new regulatory framework.
The opportunities are evident. If banks are required to expand their operational presence within the EU, the largest financial centre in the euro area should secure a meaningful share of this shift. Frankfurt benefits from its proximity to the European Central Bank, to EU banking supervision and to a well established financial ecosystem.
For the city CRD VI could generate additional highly qualified employment. This will not only concern traditional banking activities but also areas such as compliance, information technology, risk management and legal services. These positions tend to have strong multiplier effects. Each additional job in finance typically creates several further jobs in the broader services sector. This in turn leads to higher local tax revenues for the city and the surrounding region.
The renewed competition among financial centres within the EU will show how well Frankfurt has learned from the Brexit experience. One encouraging development is that Germany has refrained from applying the practice commonly described as gold plating when transposing the directive into national law. In other words, the European rules have not been tightened further at the national level.
In fact, there are tangible regulatory simplifications for what are known as third country branches. This reflects a clear political intention to strengthen the competitiveness of the financial centre and to recognise the sector increasingly as a strategic industry.
Another positive development is that the region has professionalised its international welcome culture. One stop services for companies, English language offerings within public administration and courts, as well as stronger international networks have become standard practice. These are substantial improvements. Yet the question remains whether they are sufficient to make Frankfurt attractive enough for highly qualified professionals to relocate and settle quickly.
There are still areas where further progress is needed. The situation in the Bahnhofsviertel district, the tight housing market, limited capacity at the European School and the digitalisation of public administration are frequently mentioned. For highly skilled professionals from abroad such factors are relevant. CRD VI increases the pressure to address these structural issues more seriously. Banks may be required by regulation to expand their presence within the EU, but this does not necessarily mean that Frankfurt will benefit. At the same time globally mobile talent, which is sought after worldwide, can afford to be selective.
CRD VI will influence not only the scale but also the nature of relocations. The objective is not merely sales offices or operational units but fully fledged European operations with genuine decision making authority located on site. This increases value creation within the EU while also requiring an environment capable of attracting and retaining international executives and their families over the long term.
The directive acts as a stress test
In this sense CRD VI represents more than a regulatory adjustment. The directive effectively functions as a stress test for the financial centre. It forces policymakers and public authorities to take stock and ask what lessons have been learned from Brexit and whether sufficient improvements have been made.
The coming years will show whether Frankfurt can fully seize this opportunity and whether the financial centre has gained sufficient international appeal beyond regulatory necessity. Signals emerging from Berlin during the implementation process are encouraging. If the right conclusions are drawn and implemented consistently, the so called mini Brexit could indeed become a major step forward in the development of Frankfurt as a leading financial centre within the EU.
