Does your regulatory regime know different licenses for different banking services?

Banking & Finance (2nd edition)

Israel Small Flag Israel

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.

Austria Small Flag Austria

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.

Cyprus Small Flag Cyprus

Different licenses are not required to carry out different Banking Services. Even though there are specific laws that regulate specific banking services, such as the Payment Services Law of 2018 for payment services and the Electronic Money Law of 2012 for issuance of electronic money, a single Banking License authorises the applicant to carry out all the Banking Services.

Finland Small Flag Finland

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.

France Small Flag France

There are several types of licenses issued by the ACPR depending on the activities considered as follows:

  • 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 investment services;
  • Finance company license in order to carry out credit transactions;
  • Investment firm license in order to provide investment services (except the portfolio management 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.

Turkey Small Flag Turkey

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.

Germany Small Flag Germany

The KWG only knows the licence pursuant to section 32 KWG. However, as stated in 7 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.

Switzerland Small Flag Switzerland

Switzerland recognises the concept of universal banks, where banks can perform different types of ac-tivities, for example asset management, lending, investment banking, deposit taking, etc. Certain activi-ties not related to the banking business may be permissible, but require an express power in the bank's articles of associations, which need to be approved by FINMA. Moreover, the bank's business will have to be specified in its business rules.

Slovakia Small Flag Slovakia

No, the Slovak law recognizes only one type of banking license. However, each banking license contains banking activities which the bank is going to perform, its extent and scope, as well as conditions under which the banking license was issued.

Singapore Small Flag Singapore

Yes.

There are, presently, two broad classes of banking licences awarded by MAS:

(a) full bank licences; and
(b) wholesale banking licences.

Full banks are generally able to offer the full range of banking business, including serving retail customers.

Within the licence category of full banks, there are three sub-tiers. At the top end, there are the local banks (namely, DBS Bank, United Overseas Bank, Oversea-Chinese Banking Corporation and its subsidiary, Bank of Singapore). The local banks are not subject to any limits as to the number of places of businesses they are able to establish within Singapore (although regulatory notifications may still be needed). At the other end are the regular full banks, each of which are constrained to operate only from a single place of business in Singapore. In between these two tiers are the qualifying full banks. Qualifying full banks are foreign banks which have been granted additional privileges, such as to enable them to compete with the local banks in the retail banking space. Qualifying full banks are allowed to establish up to 25 places of businesses within Singapore.

Wholesale banks are generally able to offer the full range of banking services, but are subject to the important limitation that they cannot provide Singapore dollar retail banking services.

Apart from banks that are licensed and regulated under the BA, there are also merchant banks and finance companies, which are regulated by MAS as part of the broader banking services market.

Merchant banks are approved by MAS to operate in Singapore under a distinct regulatory regime under the Monetary Authority of Singapore Act (Cap. 186) and generally provide fee-based banking activities, such as corporate finance, mergers and acquisitions advisory, and wealth and investment management. It is relatively common for private banks to operate in Singapore under a merchant bank licence.

Finance companies are licensed by MAS under the Finance Companies Act (Cap. 108). They focus on retail deposit accounts and credit facilities to individuals and corporations. Unlike banks, they do not issue cheques.

Japan Small Flag Japan

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.

Oman Small Flag Oman

As mentioned in Question 2, the Banking Law is clear in its requirement that any person conducting any banking business must first obtain a licence from the CBO. The CBO issues licences to applicants that they may carry out banking business in Oman. As part of the application made by a person wishing to carry out banking business, that person must specify which kind of banking business such person in-tends to carry out following the CBO’s approval of the licence application. By way of example, this may be commercial or investment banking, lease financing, hire-purchase activities or the operation of money exchange centres. There are however separate forms depending on whether the applicant is a domestic applicant or an existing foreign bank applying to carry out banking business in Oman.

The approval of a licence application and the consequent issuing of a licence by the CBO will be for the specific kinds of banking business that the person who made the application specified in that applica-tion. Indeed, the licence itself will state which kinds of banking business may be carried out by the per-son to whom the licence has been issued. The CBO further has the authority to approve applications in respect of Islamic banking business, whether as a stand-alone Islamic bank or as a window of an exist-ing conventional bank.

Georgia Small Flag Georgia

No, under Georgian law, only one type of banking license exists.

Liechtenstein Small Flag Liechtenstein

The BA distinguishes between banks and investment firms. Different licenses are available for investment firms, depending on the specific services provided. Lower regulatory requirements and approval standards may apply, if an investment firm provides only a limited spectrum of services (e.g. do not deal on own account with financial instruments or underwrite issues of financial instruments on a firm commitment basis).

Luxembourg Small Flag Luxembourg

Luxembourg law provides for a general banking license, relevant for most banks, and a specific regime applicable to banks issuing covered bonds. It also provides for separate licenses allowing to exercise various activities of the financial sector and/or the activities ancillary to the financial sector activities (professionnel du secteur financier, the "PSF"). These are divided into three groups:

  • investment firm licenses, which include, amongst others, the licenses of: (a) investment adviser; (ii) brokers in financial instruments; (iii) commission agents; and (iv) private portfolio managers;
  • specialised PSF licenses, which include, amongst others, the licenses of domiciliation agents and family offices; and
  • support PSF licenses for the provision of administrative and technical support to financial insti-tutions.

Portugal Small Flag Portugal

The banking services provided by credit institutions are subject to a single authorisation.

Malta Small Flag Malta

No. The Banking Act does not contemplate different types of licences for different banking services. Whenever, an institution performs or intends to performs, the business of banking in terms of the Banking Act, it must obtain a licence from the MFSA. Hence, there is only one type of banking licence available irrespective of the banking services offered.

Qatar Small Flag Qatar

The license granted is dependent on the nature of the Bank for example, the license granted for a national bank, is not the same as the license granted for a foreign bank who wishes to open a branch inside of Qatar. Furthermore the activities of the bank also play a role in the form of the license e.g. commerical bank, industrial bank, real estate bank. In addition to this, an Islamic Banking license differs from conventional banking due to the greater regulation and the need for a Shariah compliant board monitoring the activitries of the bank to ensure compliance with Islamic Shariah.

Romania Small Flag Romania

According to art. 3 of EGO 99/2006, credit institutions that are Romanian legal entities may be constituted and function (subject to NBR authorization) in one of the following forms:

  • Banks – may perform all the activities that are listed for credit institutions;
  • Credit cooperative organizations – non-governmental associations carrying out activities for the mutual benefit of members.
  • Savings and credit banks for housing – long-term financing of housing;
  • Mortgage banks – mortgage lending for real estate investments and the raising of repayable funds from members of the public through mortgage bonds.

An NBFI may conduct lending activities on a professional basis. The entity must be incorporated as a joint-stock company, subject to certain exceptions, but they cannot attract deposits.

In addition, the following entities may be constituted and function in respect of payment services and electronic money (subject to NBR authorization):

  • Payment institutions that conduct payment services.
  • Electronic money institutions that issue electronic money and may carry out payment services.

Serbia Small Flag Serbia

Our regulatory regime differentiates between licenses for different banking services. License issued by the National Bank of Serbia is required for deposit and lending services, while the license issued by the Securities Commission is required for custody banking and broker-dealer services.

United Kingdom Small Flag United Kingdom

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.

United States Small Flag United States

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 specialized licenses which may afford a licensee authority to engage in a more limited business, including (i) money transmitter licenses, which are required to accept and transmit payments or to sell items of value (which in some states may include cryptocurrency), and (ii) mortgage banking licenses, which are required to originate and service residential mortgage loans.

Italy Small Flag Italy

There are several types of licenses issued by the Bank of Italy depending on the activity to be exercised:

(i) banking activity license, pursuant to article 14 of the Italian Banking Act, which may be issued for a bank;

(ii) financial intermediary license, pursuant to articles 106 and 107 of the Italian Banking Act, which may be issued for financial intermediaries in order to allow them to the exercise of the activity of granting of financing, in whatever form, toward the public (including the issuance of guaran-tees);

(iii) electronic money institution license, pursuant to article 114 quinquies of the Italian Banking Act, which may be issued for electronic money institutions in order to issue, redeem and distribute electronic money and to provide ancillary activities to payment services (such as guaranteeing the execution of payment transactions, money exchange and data storage);

(iv) payment institutions license, pursuant to article 114 novies of the Italian Banking Act, which may be issued for payment institutions in order to provide payment services (as listed in the EU Payment Service Directive 2015/2366 – “PSD”) and manage payment systems;

(v) guarantee consortia (consorzi fidi - Confidi) license, pursuant to article 112 of the Italian Banking Act, which may be issued for guarantee consortia (consorzi fidi - Confidi) in order to exercise the activity of collective guarantee of exposures (garanzia collettiva dei fidi) and the connected services.

Thailand Small Flag Thailand

Commercial banks under the FIB Act are classified as (i) a public limited company incorporated in Thai-land and licensed to undertake commercial banking business (or Thai commercial bank), (ii) a retail bank, (iii) a commercial bank which is a subsidiary of a foreign commercial bank, and (iv) a branch of a foreign commercial bank licensed to carry on commercial banking business. There are difference li-censing requirements for each type of commercial bank.

Slovenia Small Flag Slovenia

Yes. Two main types of licenses may be distinguished:

- authorisation to provide banking services,
- authorisation to provide financial and ancillary financial services.

Updated: May 14, 2019