Does the regulatory regime know different licenses for different banking services?
Banking & Finance
While there are certain activities that may only be carried out by a Banking Corporation (as detailed above), certain banking services can be carried out under different licenses.The BOI can grant, besides a Bank license, a Mortgage Bank license, a Foreign Bank license and a Financial Institution license.
Foreign Bank License
Non-Israeli banks can operate in Israel in two basic forms: (1) obtaining a foreign banking license (2) establishing a representative office (see answer 6 below). A non-Israeli corporation which is a licensed bank in a foreign country, can receive from the Governor, a foreign banking license ("Foreign Bank"). Under the Banking Law a Foreign Bank shall engage only in the activities which are permitted to Banking Corporations in Israel.
Note that the BoI is also authorized to grant a clearing activity license for credit card companies and to monitor their activities.
Based on the website of the HNB the following licenses may be applied for in connection with banking services:
(i) operating license for credit institutions;
(ii) license to modify scope of activities of a credit institution;
(iii) license to terminate the operation of a credit institution;
(iv) operating license for payment institution (in Hungarian pénzforgalmi intézmény) and
(v) operating license of electronic money institution (in Hungarian: elektronikuspénz-kibocsátó intézmény).
Based on the Hungarian Banking Act the operating license for a credit institution shall include at least the following activities:
A. take deposits or other repayable funds from the public (not including the issue of bonds to the public as specified in the relevant legislation), and
B. to grant credits and loans.
Based on the Hungarian Banking Act credit institutions may be
- banks (in Hungarian: bank) or
- specialized credit institutions (in Hungarian: szakosított hitelintézet) or
- cooperative banks (in Hungarian: szövetkezeti hitelintézet).
Based on the Hungarian Banking Act only banks are entitled to carry out the full scope of the financial services as listed under the Hungarian Banking Act, whereas the scope of activities of specialized credit institutions or cooperative banks is limited to certain activities as established in specific statutory provisions applicable on such types of credit institutions.
Yes, the regulatory regime knows different licences for different banking services, for example:
a) A savings and loan association is a co-operative society with variable number of members and capital and that provides certain financial services to the members of the association. In order to for the savings and loan association to operate, it has to obtain a licence from the FCMC.
b) An investment management company is a company, whose main business activity is the management of investment funds and the management of funds of the state funded pension scheme. Before commencing any business activity, the investment management company shall obtain a licence from the FCMC.
c) A pension fund accumulates and invests contributions of monetary means made by pension scheme participants themselves or voluntarily made in their favour in order to ensure pension benefits to such participants. In order to for the pension fund to operate, it has to obtain a licence from the FCMC.
Depending on the type of activities different banking services licenses are available in Lithuania and include for licenses:
- Banks, specialised banks, credit unions;
- Lenders, operators of a peer-to-peer lending platform, and credit intermediaries;
- Consumer credit providers, operators of a peer-to-peer lending platforms, consumer credit intermediaries;
- Operators of crowdfunding platforms;
- Payment institutions;
- Electronic money institutions.
No, under the Polish regulatory regime there are only two types of licences, i.e. (1) a license to establish a bank; and (2) a license to commence banking operations.
While the concept of universal banks exists under Romanian law, in Romania, credit institutions may be set up as: (i) banks, (ii) credit and savings banks for housing, (iii) mortgage banks and (iv) credit cooperative organisations.
Banks may perform any and all of the activities listed for credit institutions in the Romanian Banking Law; credit and savings banks for housing are credit institutions specialising in the long-term financing of housing; mortgage banks specialise in the conduct of mortgage lending for real estate investments and the raising of repayable funds from the public through mortgage bonds, while credit cooperative organisations are independent, non-political and non-governmental associations carrying out activities specific to credit institutions for the mutual benefit of their members.
Under the Indian banking regime, a banking license allows a banking entity to undertake universal banking services (examples of which are described in response 2 above).
In a marked shift from its earlier policy, the RBI recently recognised the need to broaden the base of banking services and is taking several measures and introduced a differential licensing regime for ‘small financial banks’ and ‘payments banks’. A small finance bank is permitted to undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections of the Indian market, including small business units, small and marginal farmers, micro and small industries and entities in the unorganised sector. A payments bank can undertake all banking functions for transactions not exceeding INR 1,00,000 per customer (such as holding small savings accounts and payments/remittance services to migrant labour workforce, low income households etc.), other than those involving credit risk such as lending and issuing credit cards.
As mentioned in No. 2 above, lending, by itself, does not require a banking license. Thus, non-banks with a money lending business registration pursuant to the Money Lending Business Act can lend money, as long as the money is not funded by deposits.
In addition, the Payment Services Act was enacted in 2009. This law allows registered fund transfer service providers to engage in fund transfers of up to 1 million yen per transaction under a looser regulatory requirement, as compared to a banking license.
No. The Banking Act only provides for one type of banking licence, irrespective of the banking services offered.
The Nigerian banking system recognizes different licences for different banking services which includes commercial banking license, merchant banking license and specialised and development bank license.
In line with the CBN Scope, Conditions & Minimum Standards for Commercial Banks Regulations No. 01, 2010, a commercial banking Iicence confers on the operator of the license, the authority to undertake, inter alia, taking of deposits and maintaining current and saving accounts from natural and legal persons; providing retail banking services, providing finance and credit facilities; dealing in foreign exchange, providing treasury management services and custodial services etc.
The CBN Scope, Conditions and Minimum Standards for Merchant Banks Regulation No. 02 of 2010 provides that a merchant banking license confers on the licensee, the authority to take deposits from any natural or legal person, in an amount not below the N100,000,000 per tranche (or such other minimum amount as may be prescribed by the CBN from time to time), provide finance and credit facilities to non-retail customers; deal in foreign exchange and provide foreign exchange services, act as issuing house, provide underwriting services and treasury management services, financial consultancy and advisory as well as asset management services.
Specialised banks include non-interest banks, microfinance banks, development banks, mortgage banks and any other banks designated by the CBN as a specialised bank.
There are two main banking licenses due to ownership structure, namely commercial banks license and savings banks license. Commercial banks must be incorporated as limited liability companies. Savings banks are a distinct type of legal entity, structured as a mutual entity. Savings banks are traditionally without external owners and the equity of such savings banks is mainly retained profits from earlier years. However savings banks can also issue equity-like instruments called equity certificates ("egenkapitalbevis") or be converted into limited liability companies. Equity certificates differ from shares in that they do not give holders ownership to the bank's entire equity capital and limited voting rights in the bank's the general meeting.
Investment banks are not a separate type of banks, and many of them are strictly speaking not proper banks under the Norwegian regulatory regime, as they are not deposit-taking institutions. Some investment firms do, however, label their corporate finance departments as investment banks.
The banking services provided by credit institutions are subject to a single authorisation.
QCB Law makes clear that the conduct of financial services in the State requires that a license be obtained from the competent authority and provides sanctions for persons who conduct such activities without the required license.
Under the QCB Law, there are licences for Commercial Banks Specialized Banks Real Estate Banks Industrial Banks and the licence would determine whether it is conventional bank or an islamic bank.
Switzerland recognises the concept of universal banks, where banks can perform different types of activities, for example asset management, lending, investment banking, deposit taking, etc. Certain activities not related to the banking business may be permissible, but require an express power in the bank's article of associations, which need to be approved by FINMA. Moreover, the bank's business will have to be specified in its business rules.
Turkish banks are classified as (i) deposit banks, (ii) participation banks and (iii) development and investment banks under the Banking Law and an operation license covers all banking activities; however, depending on the bank type, activities to be conducted under an operation license would vary. As such, (i) deposit banks cannot engage in participation fund taking or financial leasing activities; (ii) participation banks cannot engage in deposit taking activities; and (iii) development and investment banks cannot provide deposit taking or participation fund taking services.
Furthermore, some activities listed under the Banking Law are subject to separate licensing requirements if such activities are to be conducted by entities other than banks such factoring, financial leasing, e-money issuance, payment and investment services.
The license for conducting banking transactions may be granted under conditions and obligations connected to it and may be restricted to individual banking activities mentioned above. In the company database of the FMA the scope of the license granted to each entity is made publicly available.
Bulgarian Law follows the provisions of Directive 2013/36/EC of the European Parliament and the Council of 26 June 2013 on access to the activity of credit institutions and prudential institutions of credit institutions and investment firms amending Directive 2002/87/EC and repealing Directive 2006/48/EC and 2006/49/EC (“CRD IV Directive”), which regulates the different banking services that a bank can perform.
The banking license entitles the bank to attract deposits or other payable funds from the public, and to extend credits or other financing on its own account and at its own risk. Apart from that, the bank can perform only the banking activities included in its license.
A bank may not perform any other activity, unless this is required for the performance of its activity or in the course of debt collection process on outstanding receivables. Banks are allowed to incorporate or acquire companies for carrying out ancillary activities.
COMF considers as financial activities the operations and services that are performed by offerors, seekers and clients, that allow the circulation of money and perform financial intermediation. For the private financial sector there are different services: i) specialized banks which are authorized for an specific credit segment with limited value operations, the general banks which are authorized to participate in two or more credit segments; ii) the financial services of general warehouses, currency exchange houses, corporations for the development of the secondary mortgages market; iii) the ancillary services of the financial system such as banking software, values transportation, ATM networks, accountancy, among others. These types of activities require an independent authorization to be granted by the Superintendence of Banks.
The following activities that are performed at the popular and solidary sector require different licenses, such as: i) credit unions; ii) second-level financial institutions for credit unions (Caja Central); iii) associate or solidary entities, communal house, community bank and saving banks; iv) the ancillary services of the financial system such as banking software, values transportation, ATM networks, accountancy, among others; and v) the Savings and Credit Mutual Societies for housing.
As is set out in detail under question 4, a banking licence allows a firm to pursue a wide range of activi-ties which otherwise require individual authorisation. For the avoidance of doubt moneylending (APR rates above 23%) is not an activity that is authorised by way of a banking licence. Separate authorisa-tions can be obtained for individual banking related activities where a general banking licence is not re-quired, for example, investment services, payment services, e-money services and credit servicing.
There are several types of licenses issued by the ACPR depending on the activities considered as fol-lows:
- Credit institution license for banking activities which may be issued for a Credit institution and may be doubled up with an investment firm license for a Credit institution providing invest-ment services;
- Finance company license in order to carry out credit transactions;
- Investment firm license in order to provide investment services (except the portfolio man-agement companies license which is issued by the AMF) ;
- Payment institution license in order to provide payment services;
- Electronic money institution license in order to issue, manage and provide electronic money;
- Money changing.
No, under Belgian law, only one banking license exists.
According to the Estonian financial regulation, we have different activity licenses for different banking services. Different activity licenses are for the credit institution, paying agency and e-money institution, the creditor and credit intermediary.
Yes. In principle, each of these services enumerated in Question 2 above triggers per se a licensing requirement. For example, the BoG may separately license payments institutions, leasing institutions and e-money institutions.
Furthermore, the BoG retains the right to specify additional criteria and prerequisites for the performance of specific banking activities.
The KWG only knows the licence pursuant to section 32 KWG. However, as stated in 5 below, the applicant has to state in the application for a licence which services are contemplated to be conducted. As a consequence, the respective licence will only cover those services that are listed in the licence application. In the event that not all services are listed in the application, this has an impact on the licensing process and, more importantly, after the licence has been granted, on the follow – on duties and the level of supervision. The requirements for own funds for example differ significantly depending on whether lending business is conducted or not. The same applies for risk management processes etc., which have to be appropriate for the actual business and have to be more elaborate the bigger the risks are that the institution takes on.
While each state offers slightly different features as part of its regulation of banking, under federal law banks may be chartered to engage in accepting deposits and engaging in fiduciary activities. There are also some more specialised licenses, including savings and loan associations, which historically have focused on residential mortgage lending and credit unions, which are non-profit member organisations.
Under Colombian law, different services and activities require different types of authorizations by the Superintendence of Finance, determining also the kind of services provided and the type of company that must be incorporated. As stated in question one, the authorization must be express and prior for each financial entity.
Regarding banking activities, Colombian law does distinguish between commercial banks and mortgage banks authorization. According to Colombian regulation, commercial banks may receive general deposits, savings deposits, grant loans and exchange securities, whereas mortgage banks can grant loans in exchange for real estate collateral.
A Finnish credit institution may be licensed as either a deposit bank or as a financing institution. Only entities licensed as deposit banks may receive deposits from the public. Financing institutions are credit institutions that provide banking services but are not allowed to receive deposits. Investment banks are usually licensed as investment firms under the Investment Services Act.
The regulatory regime in England and Wales provides for a range of regulated activities to be conducted only by authorized persons. These extend beyond pure 'banking' services. A financial activity requires regulatory authorization when it is identified as a specified activity in relation to a specified investment, it is carried on by way of business in the UK and it does not fall within any of the available exemptions.
- Specified activities include activities such as accepting deposits, dealing in, managing, arranging and advising on investments, and establishing collective investment schemes.
- Specified investments include deposits, shares, debt instruments, options, futures, units in a collective investment scheme and government and public securities.