Borrowing from a bank abroad: Lombard loans and mortgages under CRD VI and the new consumer credit rules

Keep your money with a bank outside the EU for long enough and sooner or later you will ask it for credit: a credit line against your portfolio, financing for a property, cash without having to sell. From 11 January 2027 that request gets harder for anyone resident in the EU, and not in the same way everywhere. For a Lombard loan it comes down to the purpose, for a mortgage to your own initiative and the cut-off date, and in between a new European consumer credit directive applies from 20 November 2026.

Borrowing from a foreign bank: three rulebooks, three questions

If you want to borrow from a bank abroad, three European texts touch you, and they are often confused:

• CRD VI, Directive (EU) 2024/1619, decides whether a bank based outside the EU may lend to you as an EU resident at all without an authorised branch in your member state.
• The new Consumer Credit Directive, Directive (EU) 2023/2225, usually called CCD2, sets what a consumer loan must look like: information, creditworthiness assessment, withdrawal.
• The Mortgage Credit Directive, Directive 2014/17/EU, covers loans secured on residential property or taken out to buy property.

So the first question is: is the bank allowed to lend? The second: which protections apply? The third: which risk do you carry yourself?

CRD VI: lending is a core banking service

From 11 January 2027, Article 21c of the CRD requires a firm from a third country to set up an authorised branch in your member state before it starts or continues certain activities there. Recital 5 of the directive names the activities: the core banking services in points 1, 2 and 6 of Annex I to Directive 2013/36/EU. Point 2 reads: lending including, inter alia, consumer credit and credit agreements relating to immovable property. Point 6 covers guarantees and commitments.

For you that means a loan is caught just as much as an account. How the rule works for the account, and why it turns on where you live rather than on your passport, is set out in CRD VI: it comes down to where you live. Credit adds two twists that play no part for an account: the carve-out for investment business, and the question of whether a new loan still belongs to the original client relationship at all.

A Lombard loan abroad: the purpose decides

A Lombard loan is credit against pledged securities. The bank lends against your portfolio and you get cash without selling anything. At a bank outside the EU it is the obvious loan for many clients, because that is where the portfolio already sits.

Article 21c(4) exempts the services in Annex I Section A of MiFID II from the branch requirement, including any ancillary services such as granting credits or loans for the provision of those services. Which loans those are is set out in Annex I Section B point 2 of MiFID II: credits or loans to an investor to allow a transaction in financial instruments, where the firm granting the credit or loan is involved in the transaction.

That draws a clear line:

• A Lombard loan for securities business: you borrow against your portfolio to buy more securities through the same bank. That is an ancillary service to an investment service and, on the wording, falls under the carve-out. How the rules for a brokerage account outside the EU look as a whole is covered in a brokerage account outside the EU.
• A Lombard loan as free cash: you borrow against your portfolio to put down a deposit on a property, fund a business or bridge a tax payment. The loan then serves no securities transaction of the bank. It is ordinary lending under point 2 of Annex I and so a core banking service to which the branch requirement applies.

So the collateral is not what makes the difference. The same portfolio can secure one loan that falls under the carve-out and another that does not. What counts is where the money goes. Expect a bank outside the EU to ask what the loan is for and to want it written into the contract, because the supervisory risk is the bank's.

A mortgage from a bank abroad

The mortgage is the clearest case. A loan secured on property or taken out to buy it is named expressly in point 2 of Annex I to the CRD. There is no investment carve-out to catch it. If you live in the EU and want a mortgage from a bank abroad that has no branch in your member state, from 11 January 2027 you need one of the exception routes in Article 21c.

On the wording, where the property is makes no difference. Article 21c attaches to the client established or situated in the Union. Even if you want to finance a flat in the bank's home country, as an EU resident you remain a client within the meaning of the provision. Add to that what applies anyway: security over land is governed by the law of the country where the property lies, and many banks will not finance property outside their own market as a matter of principle. Recital 6 also makes clear that using banking services outside the Union remains unaffected. The directive prohibits you nothing; it governs what the bank may do without a branch.

Your own initiative and where it stops for credit

The main exception route is reverse solicitation under Article 21c(2)(a): the branch requirement does not apply if you approach the bank at your own exclusive initiative. If the bank actively solicits you, including through an intermediary or a closely linked person, that does not count as your own initiative.

For credit this exception has a limit that matters less for an account. Under Article 21c(3) your request does not entitle the bank to market other categories of products to you than the ones you asked for. The only exceptions are those necessary for, or closely linked to, the service you originally requested. Opening an account on your own initiative years ago does not mean you also asked for a mortgage. The same point is made in a Swiss account without residence from 2027: a later mortgage request is assessed afresh.

How supervisors view branches and the limits of this exception is covered in the EBA guidelines on third-country branches. In practice: record how the loan request came about, from you, in writing, with a date. A bank that offers you financing of its own accord is acting outside the exception.

Existing loans: what the 11 July 2026 cut-off protects

Article 21c(5) preserves the rights under existing contracts concluded before 11 July 2026. A Lombard facility or a mortgage agreed before that day is therefore not caught by the branch requirement for as long as the contract runs.

The protection has three limits you should know:

1. It protects the contract, not the relationship. A new loan agreement after the cut-off is not an existing contract, even if it is with the same bank.
2. It does not protect you from termination. A bank can end a lending relationship on its own terms; the directive does not oblige it to keep you.
3. Extensions and top-ups are delicate. Whether a rollover or an increase counts as part of the old contract depends on its terms and on the transposition in your member state. Clarify it with the bank before a term runs out.

The new Consumer Credit Directive from 20 November 2026

Separately from CRD VI, Directive (EU) 2023/2225 applies from 20 November 2026. Under Article 48 the member states had to transpose it by 20 November 2025 and apply it from 20 November 2026. Under Article 47 the old Consumer Credit Directive 2008/48/EC is repealed with effect from the same day; credit agreements existing on 20 November 2026 stay under the old directive until they end, with some new rules for open-ended agreements.

For a loan from a bank abroad, the exclusions in Article 2(2) matter most:

• Property loans are excluded (points (a) and (b)): loans secured by a mortgage or taken out to acquire land or buildings fall outside the Consumer Credit Directive; for residential property the Mortgage Credit Directive applies.
• Loans above €100,000 are excluded (point (c)), with an exception under paragraph 3 for unsecured renovation loans. Recital 14 allows member states to extend the rules to larger loans.
• Loans for securities transactions are excluded (point (e)) where they are granted by an investment firm or a credit institution involved in the transaction. That is the same line as under CRD VI.

A Lombard loan taken as free cash up to €100,000 is therefore typically a consumer loan under the new directive, while a Lombard loan for buying securities is not. But note: the directive binds the member states and the lenders that fall under their law. A bank outside the EU lending from its home country without a branch works under the law of its home country and under its contract. Which protections apply in a given case is then a question of the applicable law, and that is a question to ask before you sign, not once there is a dispute.

Foreign currency: the risk nobody takes off you

A loan from a bank outside the EU is often in that bank's currency. For residential property loans, Article 23 of Directive 2014/17/EU requires a framework for foreign currency loans: either a right to convert the loan into an alternative currency, such as the currency of your income or of your country of residence, or other arrangements that limit the exchange rate risk. That too applies to lenders within the directive's scope. With a bank outside the EU, you can only count on such a right if the contract provides for it.

A Lombard loan adds a second risk: if prices fall or the exchange rate between the portfolio currency and the loan currency moves, the lending value drops. The bank then asks for more collateral or sells. A Lombard loan abroad is only as safe as the weakest of three figures: price, currency, loan-to-value ratio.

If you live outside the EU

Article 21c attaches to where the client is resident. If you live outside the EU, you are not caught as a client; for you nothing about credit changes on 11 January 2027. If you are in the middle of a move, plan the order: a loan agreed after you have left the EU is no longer subject to this rule. How the major financial centres differ for non-residents is compared in Singapore or Switzerland for private banking; the routes to the account itself are described in opening a bank account abroad.

One thing holds everywhere: borrowing abroad is legal. Interest income, capital gains and all other income stay taxable in your country of residence, no matter where the portfolio sits or who lends you the money.

Before you ask a bank abroad for a loan

Five questions settle whether a loan from a bank abroad will work for you:

1. What do you need the money for? Securities business through the same bank or free cash: that decides whether the branch requirement bites and whether the Consumer Credit Directive applies.

2. When was your contract concluded? Contracts agreed before 11 July 2026 are protected, new ones are not.

3. Who made the request? Document your own initiative and ask only for what you really need; every new product category is assessed afresh.

4. What currency is the loan in, and what happens if prices slide? Get conversion rights, loan-to-value ratios and margin call rules in writing.

5. Which law governs the contract? Ask which consumer protection rules the bank applies before you sign.

Whether a loan from a bank outside the EU is an option for you, which combination of account, portfolio and financing suits your residence, and in which order to go about it, we work out together in a free consultation.