Are there specific restrictions on foreign shareholdings in banks?

Banking & Finance

Israel Small Flag Israel

There are no explicit restrictions under Israeli law on foreign shareholdings in banks. In the past, certain foreign shareholders (foreign banks and foreign individuals) received permits from the BoI to hold control in banks in Israel. The abovementioned policy, which was published by the BoI regarding the criteria for granting control permit in a bank, addresses the possibility of foreign shareholders to obtain a permit to control a bank.

Hungary Small Flag Hungary

No, there are no restrictions. Additional requirements apply in case of acquisition of qualifying interest by a foreign licensed entity. A statement or certificate from the competent supervisory authority of the country of establishment stating that such foreign licensed entity conducts its activities in compliance with prudential regulations, shall be attached to the application for authorization to acquire the qualifying holding.

Latvia Small Flag Latvia

No, the laws and regulations in Latvia do not provide for any specific restrictions on foreign shareholdings in banks.

Lithuania Small Flag Lithuania

In general, no specific significant restrictions apply for foreign shareholdings in Lithuanian banks.

Poland Small Flag Poland

No, there are no such restrictions.

Romania Small Flag Romania

There are no additional requirements or restrictions for the foreign shareholdings at the level of the Romanian banks, or for the evaluation of the foreign shareholders.

India Small Flag India

The modes of operation of a foreign bank in India are discussed in question 7 above.
Indian residents are required to hold at least 26 per cent of the paid-up capital of the bank at all times (except in case of a WOS). However, the aggregate non-resident shareholding from FDI, non-resident Indians and foreign institutional investors in the new banks cannot exceed 49 per cent for the first five years from the date of licensing of the new bank.

The RBI is at present, in discussions with various stakeholders for liberalizing the sector and permitting 100% foreign direct investment in private banks.

Foreign investment of up to 20 per cent of the paid-up capital of a public sector bank is permitted on obtaining government approval.

Separately, any investment by a foreign banking entity above 5 per cent requires approval. The RBI can permit higher holding for a single entity under exceptional circumstances such as restructuring of problem or weak banks or in the interest of consolidation of the banking sector.

Japan Small Flag Japan

There are no specific restrictions on foreign shareholdings in banks. Foreign shareholders are subject to the same requirements as those for domestic shareholders.

Malta Small Flag Malta

No, as long as the proposed acquirer meets the assessment criteria referred to in our reply to Q15.

Nigeria Small Flag Nigeria

Other than the provisions of the CBN Code of Corporate Governance for Banks and Discount Houses which requires the prior approval of the CBN for the acquisition of an equity holding of 5% by any investor in a bank, there are no restrictions on foreign shareholdings in banks in Nigeria.

Norway Small Flag Norway

Norwegian law does not prohibit foreigners from investing in Norwegian banks. There are several foreign investors holding shares or equity certificates issued by Norwegian banks.

Portugal Small Flag Portugal

There are no specific restrictions on foreign shareholdings in Portuguese institutions.

Qatar Small Flag Qatar

Investment Law No. 13/2000 is the primary legislation governing foreign investment in Qatar. Foreign investment is generally limited to 49 percent of the capital for most business activities, with a Qatari partner(s) holding at least 51 percent. However, the law allows, upon obtaining special government approval, up to 100 percent ownership by foreign investors in certain sectors, including: agriculture, industry, health, education, tourism, development and exploitation of natural resources, energy, or mining.

Qatar amended the law in 2004 to allow foreign investment in the banking and insurance sectors upon obtaining approval of the Cabinet of Ministers. Moreover, foreign financial services firms are allowed 100 percent ownership at the Qatar Financial Center (QFC).

We are aware that a new foreign investment law is to be issued soon. This new law might introduce different percentages for foreign investment in the economic sector in Qatar.

Switzerland Small Flag Switzerland

A special additional licensing requirement exists if a bank is under a controlling foreign influence. In these cases, certain additional requirements have to be met. A controlling foreign influence is given whenever foreigners with a Qualified Participation (see Question 15.) directly or indirectly hold more than 50% of the voting rights in the bank or a significant influence on the bank is exercised in another manner. In addition, if the bank is part of a financial services group or a group being also engaged in the banking business, appropriate consolidated supervision by a recognised foreign supervisor must exist and be evidenced.

A subsequent additional license must be obtained from FINMA if a Swiss-controlled bank becomes foreign-controlled after its establishment or if a foreign-controlled bank experiences a change of its foreign controlling person(s) at a later point in time.

Turkey Small Flag Turkey

There is no restriction under Turkish banking legislation on foreign shareholdings in Turkish banks.

Furthermore, the Permission Regulation sets forth further documentation for the applications made to the BRSB in case of a share transfer as per Article 18 of the Banking Law; if the acquirer of the respective bank’s shares is a bank or financial institution incorporated outside Turkey.

Austria Small Flag Austria

The notification requirements apply to any investor in credit institutions licensed in Austria.

Bulgaria Small Flag Bulgaria

In case a bank shareholder is a foreign person, BNB may require submission of information on the applicable foreign legal regulations about its legal status and activity, as well as details about the functions and powers of the competent supervisory body, if applicable.

There are specific requirements for foreign shareholding in banks:

  1. Any legal entity seated in a Third Country, which has subscribed 10 and more than 10 per cent of the shares with voting rights in a bank, in addition to the standard documents submits a credit rating document from a credit rating agency registered in accordance with Regulation No 1060/2009.
  2. If a person that subscribed 25 and more than 25 per cent of the shares with voting rights is a bank seated in a Third Country; or is a company having a subsidiary bank seated in a Third Country or is controlled by a person, that controls also a bank seated in a Third Country, BNB completes additional steps on consulting the competent banking supervision authority and requires submission of permission by the applicant, if there is such under its domestic legislation.

A special Bulgarian law forbids legal entities registered in a list of jurisdictions with preferential tax regime (currently 26 in number) and the persons directly or indirectly controlled by them to:

  • participate in a procedure for obtaining a banking license; or
  • participate in a bank in case the participation becomes qualifying holding as discussed in the answer to Question 15 above.

The above prohibition applies ipso jure.

Ecuador Small Flag Ecuador

The applicable legislation does not contain any specific restrictions for foreigners to become shareholders of a financial institution in Ecuador.

Ireland Small Flag Ireland

There are no restrictions on foreign shareholdings in credit institutions.

France Small Flag France

The control of foreign investment in regulated entities has been removed by the Decree of 2 August 2005 regulating financial relations with foreign countries.

Belgium Small Flag Belgium

No.

Estonia Small Flag Estonia

A third country credit institution, insurance undertaking, investment firm, management company, investment fund, e-money institution or another person subject to financial supervision which wishes to acquire a qualifying holding shall, in addition to the usual information and documents specified in CIA, submit a certificate issued by the supervisory authority of the third country which proves that the person of the third country holds valid authorisation and complies with the requirements in force, to the FSA.

Greece Small Flag Greece

No. However, the BoG and/or the ECB may request from foreign prospective acquirers to satisfy specific conditions or requirements, provided that the latter relate to either of the five (5) criteria ennumerated in Question 16 above. Such a request will be likely, where the proposed acquisition may be considered as resulting a significant change in the structure of the credit institution and which may potentially disrupt the overall functioning of the banking system.

Germany Small Flag Germany

There is no general restriction on investments from countries outside the EU. However, the German Ministry of Economics can veto an investment of 25% or more in an undertaking of the financial sector, if it deems such investment to be a threat for the public order or security.

United States Small Flag United States

No. If a foreign (or any other) shareholder will obtain ‘control’ of a US bank, approval is required under the BHC Act or Change in Bank Control Act, as applicable. See our response to Question 15.

Colombia Small Flag Colombia

A foreigner can own shares in banks with the previous and express authorization of the Superintendence of Finance. Such approval depends on criteria such as solvency, moral and professional, as stated in question 16 above.

Finland Small Flag Finland

No dissenting treatment is applied to foreign investments under Finnish law.

United Kingdom Small Flag United Kingdom

No.

Updated: February 14, 2018