Insights

On the 9 May 2025, the MFSA issued a consultation document on the national transposition and implementation of the Banking Package,¹ namely CRDVI² and CRRIII³. While the requirements of CRRIII are legally binding and were largely applicable as from 1 January 2025, the provisions of the CRDVI need to be transposed into local legislation and shall apply from 11 January 2026, with a few derogations relating to the third country branches’ framework which shall become fully applicable from 11 January 2027.

Both CRD V and CRR III contain provisions that allow for Member State discretion, giving individual Member States the choice of whether or not or how to implement certain measures. Against this background, the main objective of this consultation is to gather the industry’s and other stakeholders’ feedback on the MFSA’s proposed stance on the take up, or otherwise, of such discretions. Feedback is also being requested on several additional elements related to the transposition of CRD VI and the implementation of CRR III, highlighting the MFSA’s proposed approach to certain provisions.

It is envisaged that transposition of CRDVI will necessitate an amendment to a broad range of legislation including, amongst others, the Malta Financial Services Authority Act (Cap. 330 of the Laws of Malta), the Investment Services Act (Cap. 370 of the Laws of Malta), the Banking Act (Cap. 371 of the Laws of Malta), the Administrative Penalties, Measures and Investigatory Powers Regulations (S.L. 371.05) and the European Passporting Rights for Credit Institutions Regulations (S.L. 371.11). Additionally, the MFSA anticipates the need for new legislation to regulate third-country branches. It is also expected that related amendments will be undertaken to various Banking Rules.

As regards proposals on national discretions, the Consultation Document outlines 4 Member State discretions in the CRDVI text and 2 Member State discretions in the CRRIII text together with the Authority’s proposed approach to each of the discretions. In both instances, the MFSA explains that its proposed approach has been primarily influenced by the principle of proportionality, aiming at ensuring appropriate and adequate application of requirements to local institutions.

The consultation remains open until the 6 June 2025.

¹ https://www.mfsa.mt/publication/consultation-document-on-the-national-transposition-of-directive-eu-2024-1619-and-implementation-of-regulation-eu-2024-1623-the-banking-package/ 
² Directive (EU) 2024/1619 (“CRDVI”) amending Directive 2013/36/EU as regards supervisory powers, sanctions, third country branches, and environmental, social and governance risks.
³ Regulation (EU) 2024/1623 (“CRRIII”) amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor