Does your regulatory regime impose conditions for eligible owners of banks (e.g., with respect to major participations)?

Banking & Finance (2nd edition)

Israel Small Flag Israel

Under the Banking Law in considering whether to grant a person with a permit holding or a permit control in a bank, the BoI has to take into account, among other things, the adequacy of the applicant to control or to hold the amount of shares requested, its business experience, its occupation and other business, its financial strength and integrity, the consequences of the permit on the current or future control over the bank; the plans of the applicant; the policy; public interests etc.

The BoI published a policy regarding the criteria for granting control permit in a bank. We note that not all existing control permits (most of which were issued before the policy) comply with the criteria and in addition the BoI may deviate from the criteria.
According to the policy in addition to the above considerations the BoI shall also consider the applicants personal and business integrity; investment strategy; potential conflict of interest with the bank. The policy addresses the requirement for a stable and permanent controlling core in the bank. The policy also sets out restrictions on how the means of control in the bank are held. The financial strength of the applicant will be checked with respect to different parameters. The main criteria are the ratio between the equity of the ultimate controlling shareholder (assets minus liabilities) and the value of the controlling stake which should be at least 150% (or 250% for small banks). Each controlling shareholder will be required to have additional equity of 100% from the means of control it purchases beyond the controlling stake.

Austria Small Flag Austria

For assessing the notification provided for in sec 20 para 1 BWG, in order to ensure the sound and prudent management of the credit institution of which an acquisition is proposed, and with regard to the likely influence of the proposed acquirer on the credit institution as well as the suitability of the proposed acquirer and the financial soundness of the proposed acquisition, further the reliability of the interested acquirer, the reliability, professional qualification and experience of any person who will direct the business of the credit institution and the financial soundness of the proposed acquirer will be taken into account.

Cyprus Small Flag Cyprus

A natural or legal person who plans to acquire a proportion of voting rights or capital in an ACI which reaches or exceeds twenty percent (20%) should notify the CBC, specifying the size of the proposed holding. A natural or legal person who decides to dispose its qualifying holding in an ACI must first notify in writing in advance the CBC indicating the size of its qualified holding.

In addition to the above and in accordance with the Law on Transparency Requirements (Law 190(1) 2007), the acquisition or disposal of listed shares (including those of ACIs), either listed in the Cypriot Stock Exchange (“CSE”) or in any organised market of any other EU member state, crossing directly or indirectly 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75% thresholds of the total voting rights of the issuing company must be notified to the issuer, the Cypriot Securities and Exchange Commission and/or the CSE.

Finland Small Flag Finland

The holder that reaches a qualified holding of 10%, 20%, 30% or 50% must disclose information on his/her reliability and financial situation. The acquisition can be rejected, for example, if the holding may endanger the sound and prudential business operations of the credit institution, or there are grounded suspicions in relation to the reputation or financial standing of the acquirer, the reliability or suitability of the management of the credit institution or its financial position or regulatory supervision may be jeopardized as a result of the acquisition. Restrictions also apply if the acquisition triggers concerns with respect to money laundering and terrorist financing.

France Small Flag France

Owners of banking institution must comply with a long list of criteria which main ones are the following:

- reputation of the proposed acquirer;
- reputation of the persons who are expected to take charge of the effective running of the business of the institution or to be a member of the supervisory body;
- reputation, experience and competence of key functions managers;
- financial soundness of the proposed acquirer;
- ability to still comply with prudential requirements;
- risks of money laundering.

Turkey Small Flag Turkey

In addition to the information provided under Question 17, shares (i) representing directly or indirectly 10% or more of the bank’s share capital or voting rights or (ii) comprising the privilege of nominating member(s) to the board of directors correspond to the bank’s qualified shares (the “Qualified Shares”) and holders of the Qualified Shares (the “Qualified Shareholders”) shall satisfy the criteria required for the banks’ founders as set forth under Article 8 of the Banking Law. Accordingly, a Qualified Shareholder shall:

  • not have (i) gone bankrupt, (ii) declared concordat , (iii) an approval for the restructuring application through reconciliation or (iv) been granted with a decision of postponement of bankruptcy; in accordance with the Execution and Bankruptcy Law (Law No. 2004);
  • not hold any Qualified Shares or controlling shares in banks operation licenses of which have been revoked or which have been transferred to the SDIF;
  • not hold any Qualified Shares or controlling shares in (i) bankers and financial institutions subject to liquidation, (ii) development and investment banks operation licenses of which have been revoked; or (iii)credit institutions shareholding rights (other than dividends), management and audit of which have been transferred to the SDIF or permits and authorizations to conduct banking transactions and to accept deposits and participation funds have been revoked prior to occurrence of such events;
  • even if amnestied, and except for negligent offences; not have (i) been sentenced to (a) imprisonment for more than 5 years for any crime under the abolished Turkish Criminal Code (Law No. 765); or (b) imprisonment for more than 3 years pursuant to the Turkish Criminal Code (Law No. 5237 or (ii) committed any white collar crimes listed under Article 8 of the Banking Law;
  • have necessary financial strength and reputation;
  • possess honesty and competence required for job;
  • in case of a legal entity, have a transparent and clear shareholding structure together with its risk group.

Switzerland Small Flag Switzerland

In addition to the members of the board of directors, the executive body, and any other persons who – due to their responsibilities within the bank – could jeopardise the bank's continued existence and proper business, the holders of Qualified Participations (see Question 17.) or persons exercising a Controlling Influence (see Question 17.) are subject to the fit and proper requirements in FINMA's practice.

The fit and proper requirement covers matters of professional qualifications (e.g., required for the proper management of a supervised entity) and personal reputation. The principal criterion used in assessing a person's suitability is their professional track record.

Slovakia Small Flag Slovakia

There are no specific conditions imposed. However, general conditions applicable to obtaining of the license, in particular prospective shareholders with a qualifying holding in the bank are eligible and ac-ceptable, and their relationships with other persons are transparent, especially as regards interests in the registered capital and in the voting rights.

Germany Small Flag Germany

Yes. An acquirer of a qualifying holding needs to be approved by the ECB and needs to file the information mentioned in the Joint Guidelines for the Assessment of Mergers and Acquisitions published by CEBS, CEIOPS and CESR and Articles 22 and 23 of Directive 2013/36/EU. The general assessment criteria are: reputation of the proposed acquirer, reputation and experience of those who will direct the business, financial soundness of the proposed acquirer, compliance with prudential requirements and applicable anti-money laundering and terrorist financing rules.

It should be noted that the voluntary industry deposit protection schemes also conduct ownership control proceedings that are similarly complex to the ones the regulatory authorities conduct.

Singapore Small Flag Singapore

Yes. Consistent with broader international standards, MAS expects owners and controllers of banks to meet its prescribed fit and proper criteria.

Japan Small Flag Japan

Authorisation by the FSA is required to hold the voting rights of a bank that are at or above the threshold of 20% or 15%, as applicable (see No. 17). The applicant for such an authorisation is examined on whether (i) the sound and appropriate management of the services of the bank is unlikely to be impaired in light of particulars of the funds for the acquisition of the voting rights, the purpose of holding the voting rights, or any other particulars, (ii) the sound and appropriate management of the services of the bank is unlikely to be impaired in light of the financial condition, income and expenditures of the applicant and its subsidiaries, and (iii) the applicant has a sufficient understanding of the public nature of bank services and has sufficient social credibility.

Oman Small Flag Oman

No person owning 10 per cent. or more of the capital of one bank may own more than 15 per cent. of the capital of another bank. Any change of ownership of more than 10 per cent., any change of more than 25 per cent. ownership in a shareholder having more than 10 per cent. in a bank and merger or consolida-tion of a bank each requires the prior approval of the Board and the CMA. During the approval process, the Board and the CMA will have extensive discretion to request such information as they may consider necessary or relevant for them to consider, before determining, whether or not the applicant is fit and proper for the purposes of being allowed to acquire and hold a large stake in a bank in Oman.

Georgia Small Flag Georgia

Yes, under Article 5 of Law of Georgia on the Activities of Commercial Banks, a person may not be a holder of significant shares of a commercial bank if he/she has criminal records for a serious or particu-larly serious crime, or for financing terrorism, and/or legalising illicit income, or for other economic crimes.

Liechtenstein Small Flag Liechtenstein

Yes. In the process described above, the suitability of the proposed acquirer is assessed. This includes inter alia the following aspects

  • shareholder structure and beneficial owners
  • good repute and experience of any person who, as a result of the acquisition or increase, will di-rect the bank or investment firm;
  • the financial soundness of the proposed acquirer;
  • potential risks with regard to compliance with regulatory requirements and effectiveness of su-pervision and exchange of information with competent authorities,
  • potential risks with regard to money laundering or terrorist financing.

Luxembourg Small Flag Luxembourg

Yes, eligibility of shareholders is subject to a suitability assessment of the entire chain of shareholding, the management, the key functions (as listed in the response to Question 10. above), the infrastructure, the business plan, etc.

Portugal Small Flag Portugal

Banco de Portugal may oppose the plan to acquire or increase a qualifying holding if it considers that it has not been demonstrated that the proposed acquirer has provided incomplete information or fulfills the conditions to ensure the sound and prudent management of the credit institution – it shall assess:

a) the suitability of the proposed acquirer,

b) the reputation, professional qualification, independence and availability of the members of the management body of the credit institution, to be appointed as a result of the proposed acquisition;

c) the financial soundness of the proposed acquirer, in particular in relation to the type of business pursued or envisaged in the credit institution;

d) whether the credit institution will be able to comply and continue to comply with the applicable prudential requirements and, in particular where it belongs to a group, whether the group has a structure that makes it possible to exercise effective supervision, effectively exchange information with the competent authorities and determine the allocation of responsibilities among the competent authorities;

e) whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering or terrorist financing is being or has been committed or attempted, or that the proposed acquisition could increase the risk thereof.

Malta Small Flag Malta

Apart from the notification and approval requirements set out in our reply to Q17, eligible owners of banks must keep the MFSA informed of any changes to the information they would have submitted when applying to be approved as qualifying shareholders.

Qatar Small Flag Qatar

Article 124 of the QCB Law provides that the Board shall determine the ownership ratios and terms of natural and juristic persons of the shares of financial institutions under the control and supervision of the Central Bank, and such ratios may not be exceeded, directly or indirectly, and each financial institution must provide the Bank with all the information and data related thereto.

Romania Small Flag Romania

The EU regulatory requirements (e.g. Directive 36/2013) and EU level banking sector guidelines (i.e. EBA guidelines) apply.

The significant shareholder of a bank is defined as the individual or legal entity or the group of individuals or legal entities which act in concert and which hold directly or indirectly qualifying holdings (i.e. a direct or indirect holding in an bank which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of that bank).

The potential acquirer intending to become a significant shareholder must meet certain criteria detailed within relevant legal framework, out of which we mention the following: (i) reputation (i.e. integrity and professional competence); (ii) financial status; (iii) capacity of observing prudential requirements; and (iv) observance of money laundering and counter-terrorism provisions.

If the NBR is notified by more potential acquirers intending to acquire participations within the same bank, the NBR must treat each potential acquirer in a non-discriminatory manner.

Serbia Small Flag Serbia

Regulatory regime imposes a number of conditions for bank owner’s qualification, referring to its proper financial condition, good business reputation, business activities, transparency, possibility of determination of origin of assets used for the purchase of shares of the bank, lack of indications that activities connected to acquiring shares in the bank were performed for money laundering or financing terrorism, etc.

United Kingdom Small Flag United Kingdom

When considering whether or not to grant approval, the PRA considers the suitability of the person, having regard to their likely influence over the bank. This will involve considering the following statutory items:

  • the reputation of the section 178 notice-giver;
  • the reputation and experience of any person who will direct the business of the UK authorised person as a result of the proposed acquisition;
  • the financial soundness of the section 178 notice-giver, in particular in relation to the type of business that the UK authorised person pursues or envisages pursuing;
  • whether the UK authorised person will be able to comply with its prudential requirements (including the threshold conditions in relation to all of the regulated activities for which it has or will have permission);
  • if the UK authorised person is to become part of a group as a result of the acquisition, whether that group has a structure which makes it possible to—
    (i) exercise effective supervision;
    (ii) exchange information among regulators; and
    (iii) determine the allocation of responsibility among regulators; and
  • whether there are reasonable grounds to suspect that in connection with the proposed acquisition money laundering or terrorist financing is being or has been committed or attempted; or the risk of such activity could increase.

United States Small Flag United States

As stated in response to Question 17, only shareholders that will have ‘control’ of a bank must be approved. When approving applications for shareholders to acquire ‘control’ of a bank, the appropriate bank regulatory agency or agencies will review certain factors, such as (i) competitive factors; (ii) financial condition of the person(s) or company seeking to acquire control of the bank; (iii) competence, experience and integrity of the acquiring person(s) or company; and (iv) other information necessary to determine if there is risk to depositors or the FDIC’s Deposit Insurance fund if the person(s) or company obtains control of the bank. In the case of a company that acquires control of a bank, the company will become subject to the BHC Act and be subject to comprehensive regulation and consolidated capital rules.

Italy Small Flag Italy

Yes. With reference to the major participations (i.e. the owners subject to the authorisation provided under article 19 of the Italian Banking Act), pursuant to article 25 of the Italian Banking Act, the relevant owner must have the necessary requisites of honorability and satisfy the requirements of competence and fairness in order to grant the sound and prudent management of the bank.

Thailand Small Flag Thailand

There is no specific provision under the FIB Act regarding conditions for eligible owners of commercial banks. However, the FIB Act imposes characteristics for directors, managers and persons with power of management.

The appointment of a director, manager, person with power of management or advisor of a financial institution requires the prior approval of the BoT, irrespective of whether it is the appointment of a new person or reappointment of the same person.

Slovenia Small Flag Slovenia

Prior to issuing an authorization for the acquisition of the shareholding in a bank, the Bank of Slovenia assesses the suitability of the future qualifying holder on the basis of the following criteria:

1. reputation of the future qualifying holder;
2. reputation of persons who as a result of the acquisition of a qualifying holding will have the opportunity to manage the bank or to otherwise influence its operations;
3. financial soundness of the future qualifying holder, particularly in connection with the types of transactions that the bank executes or is planning;
4. bank’s ability to act in accordance with risk management rules and to meet the requirements and restrictions set out in the Slovenian Banking Act after the acquisition of the shares;
5. risk in relation to the prevention of anti-money laundering and terrorist financing.

Updated: May 14, 2019