What is the general application process for bank licenses and what is the average timing?

Banking & Finance (2nd edition)

Israel Small Flag Israel

The Governor, together with the licensing committee, has the authority to grant a banking license.

The general process of bank licensing includes 4 main steps:

a. Pre Filing – submission of the bank general plan for a principal approval.

b. Application Process - submission of the bank detailed plan for a practical approval.

c. Organization Phase – practical preparation to establish a new bank, including a POE (Pre-Opening Examination) by the Supervisor.

d. Final Approval – after the correction of errors, identified during the POE, and after obtaining a Controlling Shareholder Permit, as detailed below, the granting of a bank license.

The minimum timelines of the process mentioned above estimated at 2 years at least.
Please note that there are no recent precedents for a new bank license.

Austria Small Flag Austria

In general, the ECB is competent for granting and extension of licenses for CRR-credit institutions (i.e. those credit institutions that accept deposits or other repayable funds from the general public and which grant loans on their own account pursuant to Article 4 para 1 no 1 CRR) by applying national legislation. For Austrian non-CRR-credit institutions as well as for branches of foreign credit institutions, competence remains with the FMA.

All applications are to be submitted to the FMA, regardless of whether the decision has to be taken by the FMA or the ECB. The Financial Market Authority assesses the application based on the conditions set out in the BWG. In case the institution making the application fulfils the conditions in accordance with the CRR, the FMA forwards the application with a draft decision and the relevant documentation to the European Central Bank for the decision-making process. The applicant must enclose particular information on the business plan, from which the type of planned transactions, the organizational structure of the credit institution, the planned strategies and processes for the monitoring, controlling and limitation of risks arising from banking transactions and banking operations as well as the identity and the amount contributed by owners, who possess a qualifying holding in the credit institution and information required for the purpose of assessing the reliability of these owners, is apparent. The average timing essentially depends on whether the application is for a “full” license and therefore for major banking activities and the concept presented to the FMA. However, the process should be completed within a period of twelve months.

Cyprus Small Flag Cyprus

The applicant or its authorised representative submits an application for obtaining authorisation to carry out the Banking Services to the CBC. Such an application must be accompanied by a programme of operations specifying the types of business activities planned and the organisational structure of the bank and any other related information and documents as may be required by the CBC.

The CBC will either refuse authorisation and notify the applicant of its reasoned decision within 6 months of receipt of the application, or if the application is incomplete, the CBC will request from the applicant additional information and/or documents and will notify its decision within six months of the receipt of the complete application. The CBC will conduct a preliminary check of the application and will notify the applicant of its decision within 12 months of receipt of its complete application.

According to the Law, the applicant may oppose the decision of the CBC to refuse its application by way of appeal under the Constitution.

Finland Small Flag Finland

Credit institution licences are approved by the ECB upon a decision proposal made by the FFSA. A written application to obtain a credit institution licence must be addressed to the FFSA with supporting documents attached. The application to the FFSA is free of form and may be submitted in Finnish, Swedish or English. The Finnish Ministry of Finance has issued a detailed decree on the information and documents that must be submitted to the FFSA in connection with the application.

The FFSA is further responsible for granting licences for:

  • central bodies belonging to an amalgamation of deposit banks;
  • local branches of third country licensed credit institutions; and
  • mortgage credit institutions.

The credit institution licence must be granted if the following prerequisites and specific conditions are met:

  • All persons who, directly or indirectly hold at least 10% of the shares or other voting participations in the credit institution are considered reliable.
  • The founders of the credit institution are reliable.
  • The requirements regarding permitted business operations are fulfilled.
  • The capital requirements are fulfilled.
  • The applicant is managed in a professional manner and in line with sound and prudent business principles.
  • Any close links, as defined in the EU Capital Requirements Regulation 575/2013, do not prevent effective supervision of the credit institution.
  • The laws of a non-EEA state that are applicable to a natural or legal person that is closely linked to the applicant do not prevent the effective supervision of the applicant.
  • The applicant has sufficient financial resources and strategies to carry out the business
  • activity of a credit institution.

  • The organisation has its headquarters in Finland.
  • The applicant fulfils the other requirements set out in the relevant legislation.

The FFSA must submit the decision proposal on the authorisation of a Finnish credit institution to the ECB within four months of receipt of the full and complete application. A decision must be announced within 12 months of receipt of the application.

The FFSA must be notified by way of a so-called passporting notification if a credit institution established in another EEA country intends to establish a branch in Finland or offer banking services into Finland on a cross-border basis. As a rule, a branch of a credit institution established within the EEA may commence its activity within two months of submitting such notification to the FFSA.

A non-EEA established credit institution may only provide services in Finland if it has established a branch in Finland and obtained a Finnish licence for the services offered. The laws and regulations applicable to a branch office of a non-EEA established credit institution generally correspond to those applicable to a Finnish credit institution. The FFSA must process the application within six months from receiving a full and complete application. A decision on the authorisation must be announced within 12 months of receipt of the application.

France Small Flag France

Before starting above mentioned banking activities, the institutions must apply for a licence issued by the ACPR as follows:

  • contact the Authorisation, Licensing and Regulation Division to present plans and proposed timetable;
  • prepare an application for the licence, including all supporting documentation to be submitted to the ACPR General Secretariat.

Credit institution licences are issued by the ECB based on draft decisions sent by the ACPR.
The ACPR or the BCE have to decide on the application within a 6 months delay following the receipt of the complete application.

In practice, the licensing decision must be taken within:

  • 6 to 12 months following the receipt of the application for credit institutions and finance companies;
  • 4 to 5 months in the case of investment firms;
  • 3 months in the case of payment institutions and electronic money institutions.

Turkey Small Flag Turkey

Pursuant to the Banking Law, the BRSA is the authorized entity for granting banking license in Turkey and applications shall be made to the BRSA. Licensing for operating as a bank is a two-step procedure; first an incorporation permit must be obtained from the BRSB in order to establish a bank or a foreign bank's branch in Turkey and secondly, an application should be made to the BRSB for an operation license to carry out banking activities in Turkey.

A. Incorporation Permit

Pursuant to Article 7 of the Banking Law following conditions shall be met for incorporation as a bank:

(i) Incorporation in the form of a joint stock company (anonim şirket) with a minimum paid-in capital of TL 30 million;

(ii) Shares must be registered and issued against cash;

(iii) Articles of association and founders shall be compliant with the Banking Law;

(iv) Board of directors members shall be professionally qualified for the projected activities compliant with the corporate governance rules applicable to banks;

(v) Envisaged scope of activities must be consistent with the anticipated financial, managerial and organizational structure;

(vi) Shareholding structure shall be transparent and there should not be any issues that could prevent consolidated auditing.

Application for incorporation permit shall be made to the BRSA with the documents required under the Regulation on Operations of Banks Subject to Permission and Indirect Shareholding (the “Permission Regulation”). BRSA is entitled to require any further information and document(s) as deemed necessary. The incorporation permit shall be issued by the BRSB within 3 months following the respective application and becomes effective upon publication in the Official Gazette.

B. Operation Permit

Following the publication of the incorporation permit in the Official Gazette, an application for operation license shall be filed with the BRSA within 9 months, failure of which would result in the revocation of the incorporation permit.

In order to be granted with an operation license, the share capital of a bank shall be paid in cash and be sufficient to conduct the contemplated activities. Additionally other requirements shall be satisfied such as (i) the BRSA shall be provided with evidence proving that 25% of the system entrance fee at an amount corresponding to 10% of the minimum capital required by the Banking Law has been paid to the SDIF; (ii) activities of the bank shall comply with the corporate governance principles and the bank shall have adequate personnel and technical equipment; (iii) managers shall be qualified as set forth in the corporate governance principles.

The BRSB shall issue its decision on the grant of operation license within 3 months following the application. Operation licenses also become effective upon being published in the Official Gazette by the BRSB.

Germany Small Flag Germany

The application for authorisation is to be made in writing and signed by the appropriate number of legal representatives of the applicant. The application and all the necessary documentation should be submitted to BaFin in triplicate.

The application should state the name of the firm, its legal form, registered office, business purpose, governing bodies and their composition, as well as the date on which business operations are expected to commence. In addition, it should indicate the banking and financial services specified in section 1 paras 1 and 1a KWG for which authorisation is being sought. Furthermore, it should be explicitly stated whether the institution is to be authorised to obtain ownership or possession of funds or securities of customers, whether it is to be trading in financial instruments for its own account, and whether such transactions are to be conducted in the banking book.

The application should be accompanied by certified copies of the formation documents, the partnership agreement or the articles of association, as well as the rules of procedure envisaged for the senior management.

The following information and documentation should also be included with the application:

- Suitable evidence of having the financial resources needed for business operations.

- The names of the senior managers.

- The information required to assess the trustworthiness of the applicants and of the senior managers.

- The information required to assess the professional qualifications of the proprietors and the senior managers and information on the remuneration system.

- A viable business plan explaining the nature of the contemplated business including a well-founded description of its development, markets, target customers, strategy, the relevant risk factors and projected balance sheets and projected profit and loss accounts for the first three full financial years after the commencement of business operations, covering a Base Case Scenario and a Stress Scenario.

- A detailed description of the intended business operations.

- A brief description of the market and competitors.

- Drafts of planned customer contracts, contracts for management services, powers of attorney to operate an account/safe custody account and general terms and conditions — if such documents have already been drawn up.

- A description of the organisational structure of the institution, accompanied by an organizational chart indicating, in particular, the responsibilities of the senior managers; it should be indicated whether branches are to be established, and if so, where, and whether the intention is to provide financial services in another EEA country by way of cross-border services; in addition, it should be stated whether operational units are intended to be outsourced to another undertaking.

- A description of the planned internal monitoring procedures detailing, in particular, how compliance with the obligations pursuant to the KWG and the German Securities Trading Act (Wertpapierhandelsgesetz) is to be safeguarded.

- The organisational arrangements to ensure compliance with anti-money laundering and anti-terrorist financing rules.

- If significant holdings (see also question 18 below) are held in the institution, the application for authorisation should also include the following:

  • The names of the holders of the significant holdings;
  • The respective amounts of such holdings;
  • The information required to assess the trustworthiness of these holders or of the legal representatives or of the general partners;
  • If an applicant or a holder of a significant holding belongs to a group, the structure of the group should be described, accompanied by consolidated group accounts.
  • Where no significant holdings are held in the institution, the names of the biggest shareholders should be given, up to a maximum of 20.
  • Any facts indicating a close link (as defined in Article 4 (1) number 38 of the Regulation (EU) 575/2013, ie Capital Requirements Regulation („CRR”) between the financial services institution and other natural persons or undertakings should be stated.
  • The information and documentation under section 2c KWG in conjunction with the Ownership Control Regulation (Inhaberkontrollverordnung).
  • In the case of institutions in the legal form of a sole proprietorship, the proprietor should demonstrate the extent to which he/she has taken appropriate measures to protect customers for the event that the institution discontinues its business operations owing to the proprietor’s death or legal incapacity or for other reasons.

With regard to timing it can be said that a time span of eight to twelve months should be planned for until the licence is granted. The timing of such process can be influenced by the requirement to get documents translated by certified translators (if originals are not in English), and originals may need to be notarised and in some cases apostilled.

Switzerland Small Flag Switzerland

In order to obtain a banking license from FINMA, one must submit a written application in an official language of Switzerland (German, Italian or French), together with several exhibits supporting the statements made therein (which may also be in English), that shows that all requirements relevant under prudential supervision are met and are appropriate for the bank's intended business.

The application procedure will in most cases be prepared and conducted by the legal advisor in close co-operation with the (future) legal owner / shareholder of the bank. The bank's special licensing auditor plays an important role in the application procedure since the license will not be issued by FINMA until FINMA has received an audit report confirming compliance of the constituting documents and the bank's organisation with all relevant regulatory requirements.

The duration of the licensing process depends on the complexity and completeness of the application. According to FINMA, the average duration of the proceeding (not including the preparation therefor) is six months.

Slovakia Small Flag Slovakia

The application process for issuance of the bank license begins with the submission of the application to the NBS. To issue the bank license the following conditions under the AOB shall be met, in particular:

a) a monetary contribution of at least EUR 16,600,000 into the bank’s registered capital is fully paid up;

b) the monetary contribution into the registered capital and other financial resources of the bank have a transparent and legal background;

c) prospective shareholders with a qualifying holding in the bank are eligible and acceptable, and their relationships with other persons are transparent, especially as regards interests in the regis-tered capital and in the voting rights;

d) persons nominated to positions that include members of the statutory body, the authorized rep-resentative, members of the supervisory board, senior employees, and the head of internal con-trol and internal audit are fit and proper persons;

e) the draft articles of association of the bank are available;

f) a business plan based on the strategy proposed for the bank’s activities, supported by real eco-nomic calculations, is available;

g) a group with close links that includes a shareholder with a qualifying holding in the bank is trans-parent;

h) the exercise of supervision is not impeded by the close links of the group mentioned in subpar-agraph (g);

i) the exercise of supervision is not impeded by the legal system or the application of laws in a country in the territory of which the group mentioned in subparagraph (h) has close links;

j) the bank’s registered office, headquarters, and place of business will be in the territory of the Slovak Republic; the bank may also conduct banking activities outside the territory of the Slovak Republic through its branches or directly, without establishing a branch, under the conditions laid down in AOB,

k) the shareholders establishing the bank can prove their financial capacity to overcome an adverse financial situation faced by the bank;

l) the conditions equivalent to those for the issuance of an authorization for investment services are met, as appropriate, in relation to the requested scope of investment services, investment ac-tivities, and ancillary services,

m) the conditions equivalent to those for the issuance of an authorization to provide payment ser-vices are met, as appropriate, in relation to of the requested scope of payment services;

n) the conditions equivalent to those for the issuance of an authorization to issue electronic money are met, as appropriate, in relation to of the requested issue of electronic money;

o) appropriate technical systems and procedures, and adequate resources, material and technical conditions are available for the proper conduct of banking activities;

p) adequate organizational conditions, qualified personnel, and a functional management and con-trol system, including internal control and internal audit, a risk management system, and pruden-tial rules and regulations are available for the conduct of banking activities;

q) the applicant has not been convicted of any criminal offence; this fact is to be proved and doc-umented with a proof of a clean criminal record, no older than three months.

If the application form is duly filled out and all annexes / documents are properly delivered to the NBS, then on average the process takes up to 9 months.

Singapore Small Flag Singapore

Applying for a bank licence involves the submission of an application form to MAS, together with various specified supporting documents.

It is not possible to discern an average timing, as much will depend on the quality of the initial application paperwork and the overall merits of the application, as determined by MAS. In general, it will be prudent for an intended applicant to allocate between 6 to 18 months for the entire process.

In practice, an interested party will enter into an initial exploratory discussion with MAS, before formally putting in the application paperwork.

Japan Small Flag Japan

The application process for bank licenses may be divided into two stages: consultation and formal examination. A preliminary examination process before formally submitting a license application is also available and is usually used when establishing a new bank. The standard consultation period is not officially published and may vary widely depending on the circumstances, but the average timing seems to be around one year. The Enforcement Ordinance of the Banking Act requires the FSA to make efforts to process the formal examination within a standard period of one month.

Oman Small Flag Oman

The general application process for a licence to carry out banking business in Oman requires that the person wishing to carry out banking business in Oman makes an application for a licence to the CBO, together with all supporting documents and information as required by the Banking Law or the CBO. The form is as prescribed by Banking Circular of the CBO Number BM/REG/008/7/75-4-2.02, and this form covers all kinds of banking business that an applicant may intend to carry out (with the proviso noted in Question 2 in relation to domestic applicants and non-Omani existing bank applicants).

The Board shall review each licence application and applicable supporting or incidental documentation to determine whether such application meets the requirements and objectives of the Banking Law, the commercial, financial and economic needs of Oman and such other factors as may be required by regu-lations issued by the CBO from time to time or other applicable law (all constituting the “Requirements”).

The CBO must notify the applicant in writing that the licence application has been completed. Within 120 days of this notice, the Board must, if the application meets the Requirements, approve the application. If the Board determines that the application does not meet the Requirements, it must, within the same timeframe, notify the applicant, setting out the reasons for the Board’s determination. The Banking Law further states that failure by the Board to approve or disapprove an application with the 120 day timeframe specified in the Banking Law shall constitute a disapproval of the application.

Georgia Small Flag Georgia

A banking license is issued by the National Bank of Georgia on the basis of an application from the relevant legal entity.

The following Information and documents shall be submitted to NBG for acquiring a banking license:

a) Application Form filled out by the applicant;

b) Incorporation Documents:

  • Articles of Incorporation (Charter);
  • Extract from the corporate registry;
  • Minutes of the First Meeting of Shareholders (founders of the Bank);
  • Minutes of the First Meeting of Supervisory Board and Board of Directors.

All incorporation documents of the applicant shall be originals or certified copies (in case of foreign documents, they need to be apostilled or legalized, depending on country of origin);

c) Information about stated share capital and paid off share capital; information about ownership and origin of sources of Bank’s stated share capital and supervisory capital;

d) The bank statement certifying the payment of minimum amount of share capital;

e) Information certifying that Administrators of the Bank are in compliance with the Administrator Compliance Requirements established by NBG;

f) Filled out Compliance Declaration(s) about the owners (direct and beneficial owners) of a considerable amount of shares of the Bank;

g) Information about ownership structure/group of the applicant in the form established by the law;

h) Information about the Supervisory Board, Audit Committee and Board of Directors of the applicant;

i) Internal By-laws and Regulations approved by the Supervisory Board of the Bank;

j) Business Plan of the Bank approved pursuant to the Charter of the Bank;

k) Documents that certify the ownership or possession of the real estate property, where the Bank shall be located;

l) Information about other financial resources, about the location of the central branch and other branches of the Bank;

m) Document certifying payment of the licensing fee;

n) In case of a subsidiary/branch of a foreign bank – the financial statements of the parent company for the previous 3 years, the decision of the supervisory board of the parent bank on applying to NBG for banking license, the confirmation of the supervising entity of the parent bank on the establishment of the subsidiary/branch in Georgia;

o) Any other information/document which might be requested by the National Bank of Georgia in each particular case.
The decision shall be made within 3 months from the date of application. The decision shall be communicated with the applicant in a written form.

Banking activities shall be launched within 6 months from the date of license issuance. Otherwise, banking license expires.

Liechtenstein Small Flag Liechtenstein

Banking licenses are issued by the FMA. The FMA offers a voluntary preliminary application process in which it checks the application for “red flags”. The preliminary application process does not require the original documents later needed for the definitive application.

Upon receipt of the definitive application, the FMA issues an acknowledgement of receipt. The duration of the approval procedure depends primarily on the conclusiveness and completeness of the information and documents specified in the application. Any rejection must be notified to the applicant within six months of receipt of the application or, if the application is incomplete, within six months of submission of the required information. In any event, a decision shall be taken within twelve months of receipt of the application.

The licensing procedure triggers supervisory fees in the amount of CHF 100.000 for banks and CHF 30.000 for investment firms.

Luxembourg Small Flag Luxembourg

To obtain an authorization to operate in Luxembourg, a credit institution has to submit to the CSSF an application complying with the Financial Sector Law, including various requirements regarding capital structure, shareholding structure, transparency and management. The authori-zation is granted by the Minister of Finance after the review of the application by the CSSF. In practice, this might take between 12 to 18 months, if no specific issues are raised.

Portugal Small Flag Portugal

Overall, the general application process for the issuance of a banking license is divided in two phases: (i) authorisation phase and (ii) registry phase.

Firstly, the interested party shall fill out an application form with the following elements (inter alia):

a) characterisation of the type of credit institution to be set up and a draft of the articles of association;
b) programme of operations, including the type of operations to be carried out, geographical location, internal organisation, as well as material, technical and human resources to be used and prospective accounts for each of the first three business years;
c) identity of the founding shareholders, indicating the amount of capital subscribed by each of them;
d) reasoned explanation on the adequacy for the shareholder structure to the stability of the credit institution;
e) statement of commitment to the effect that on the date of setting-up and as a prerequisite of the same, the amount of capital stock required by law has been deposited with a credit institution;
f) robust corporate governance arrangements;
g) identification of the members of the management and supervisory bodies, accompanied by a justification from the applicants of their suitability to ensure the sound and prudent man-agement of the credit institution.

Additional information may be required by the European Banking Authority and Banco de Portugal. The applicants must be notified of the decision within 6 months of the receipt of the ap-plication or, where applicable, of receipt of the additional information required, but in any case, within twelve months from the receipt of the initial application – the lack of notification implies refusal of the application.

The authorisation may be expressly refused, whenever:

a) the application for authorisation is not accompanied by all the required information and documents;
b) the application file contains inaccuracies or false statements;
c) the credit institution to be set up does not conform with some legal requirements;
d) Banco de Portugal is not satisfied that all the shareholders fulfil the necessary requirements as to ensure a sound and prudent management of the credit institution;
e) the credit institution does not have sufficient technical means and financial resources for the type or volume of transactions which it intends to carry out;
f) the effective supervision of the institution to be set up is prevented due to close links between the credit institution and other natural or legal persons;
g) the effective supervision of the credit institution to be set up is prevented or severely ham-pered by virtue of laws or regulations of a third country governing one or more of the persons with which the credit institution has close links, or of difficulties involved in their en-forcement;
h) the members of the management and supervisory bodies do not comply with the reputation, professional qualification, independence or availability requirements set out by appli-cable law;
i) the company does not demonstrate its capacity to comply with the duties set out by applicable law.

The authorisation lapses if the credit institution fails to commence its activity within a period of twelve months. In addition, there are circumstances where the authorization may be withdrawn by Banco de Portugal/EBA.

Credit institutions shall not commence their activity without being subject to a special registry before Banco de Portugal, which covers the following items:

a) company or business name and, where applicable, the brand or trade name;
b) corporate object;
c) date of setting-up;
d) location of head office;
e) capital stock;
f) paid-up capital;
g) identity of the shareholders with qualifying holdings, as well as of their beneficial owners;
h) identity of the members of the management and supervisory bodies as well as of those who chair the general meeting of shareholders;
i) delegation of management powers, including the allocation of responsibilities or executive functions to the members of the management bodies;
j) date of commencement of activities;
k) provision of services;
l) location and date of the setting-up of branches, subsidiaries, agencies and representative offices;
m) identity of the managers of branches and representative offices established abroad;
n) inter-shareholder agreements.

The registry is considered to have been made if Banco de Portugal raises no objection within 30 days of the date on which the application was properly filed or, if it asked for supplementary information, within 30 days of receipt thereof.

The process for granting the authorisation shall not exceed a year.

Malta Small Flag Malta

The Banking Act requires that any company desirous of commencing the business of banking in or from Malta shall, before commencing any such business, apply in writing to the MFSA for a banking licence, notwithstanding the possibility withdrawing the application, by written notice to the MFSA, at any time before it has been granted or refused. Moreover, the Banking Act prescribes that, in the event of reason-able doubt as to whether the banking activities being transacted in or from Malta by any person and thus require a licence in this regard, the MFSA shall conclusively determine the matter.

In order to be able to grant a banking licence the MFSA must be satisfied that the minimum criteria relat-ing to prudent conduct, fit and proper persons, integrity and professional staff and safety of potential depositors are fulfilled with respect to the applicant. For this purpose, all applications for such a licence shall be filed in accordance with its official application forms as applicable and shall be accompanied by:

a) a copy of the Memorandum and Articles of Association of the institution;

b) audited financial statements for the last three years (if applicable);

c) a business plan including the structure, organisation and management systems of the prospec-tive bank;

d) identity of all directors, controllers and managers of the institution and submission of personal questionnaires as applicable;

e) identity of all shareholders with a qualifying shareholding and submission of qualifying share-holders questionnaires as applicable;

f) identity of the individuals who will be effectively directing the business of the prospective bank, and submission of personal questionnaires as applicable;

g) copy of draft material outsourcing agreements; and

h) duly completed internet and electronic banking questionnaire.

Notwithstanding the submission of the information and documents indicated above, the MFSA may re-quire an applicant for a licence to submit additional information as it may deem appropriate to determine an application for a licence. Furthermore, it is expected that an applicant for a licence notifies the MFSA immediately of any subsequent additions or alterations with respect to any of the documents or infor-mation submitted as part of the application pack.

The MFSA must also be satisfied that the Applicant has met the following criteria:

  • An initial capital amounting to no less than five million Euro (€5,000,000) or its equivalent – this applies equally to Maltese registered banks and overseas institutions wishing to set up branches in Malta;
  • At least two (2) individuals who effectively direct the business of the Company – this is in line with the "four-eyes" principle;
  • Must have notified the MFSA of the identities of the shareholders or members whether direct or indirect, that have qualifying holdings and of the amounts of those holdings or, where there are no qualifying holdings, of the twenty (20) largest shareholders or members;
  • Such shareholders or members, controllers and/or persons responsible for the direction of the business of the credit institution, must, to the satisfaction of the MFSA, be suitable persons to ensure its sound and prudent management; and
  • Where there are close links between the Company and another person(s), such links do not, through any law/regulation/administrative provision or in any other manner, prevent it from exer-cising effective supervision of the Company once in possession of a licence.

The MFSA must determine an application for a licence within six (6) months of receipt of the application. In the case where an application is not filed in compliance with the requirements of the Banking Act or if additional information is requested, the MFSA must determine that application within six months of com-pliance under the respective provisions of the Banking Act or the submission of additional information, whichever is the later.

In any event, the MFSA is bound to determine an application for a licence – by either granting such un-conditionally, subject to conditions it may deem appropriate, or refusing to grant it a licence all together — within twelve months. In the case of a refusal to grant a licence, the MFSA shall inform the applicant on the reasons for such refusal in writing.

The MFSA shall also notify the European Banking Authority (“EBA”) of every licence issued to a credit institution in terms of the Banking Act and any regulations or Banking Rules made thereunder.

Qatar Small Flag Qatar

After the applicant applies for a license and submits the relevant documentations, pursuant to Article 82 of QCB Law which provides that the Governor shall issue his decision to grant the license within sixty days from the date of fulfillment of all the conditions provided for in this law and the regulations and decisions issued in implementation thereof, according to the public interest requirements and the national economy need.

As per Article 83 of QCB Law, the governor shall issue a grounded decision rejecting the licensing in the event it does not fulfill the conditions provided for. The applicant shall be notified of the issued decision regarding the application’s rejection and the reasons thereof. The notification shall be delivered to the applicant’s residence, or office. Notification may also be made in any means which ensures the knowledge of the decision. Applicant may appeal against the decision before the “Dispute Resolution Committee” established under Article 190 of QCB Law within 15 days from the date of receiving the notification.

Romania Small Flag Romania

Under art. 3, NBR Reg. 11/2007, and art. 10, EGO 99/2006, the authorization of a credit institution comprises two stages:

1. Authorization of the establishment of the credit institution; and
2. Authorization of the functioning of the credit institution.

The NBR approval of the establishment of the credit institution does not guarantee the authorization of the functioning of the credit institution (operational approval), with the establishment authorization only indicating the shareholders’ permission to constitute the credit institution (art. 3(2), NBR Reg. 11/2007). This means that the establishment authorization and the functional authorization are two distinct phases.

The NBR decides on the granting of the establishment authorization not later than four months from the date of the application. No later than three months following the application date, the NBR may request further information or documents. Within two months of the notification of the establishment authorization by the NBR, the credit institution must present the NBR with the documents that attest to its legal establishment, in order to obtain the authorization to function.

The required documents include the articles of association, information on significant shareholdings, on the management team and the identity of the financial auditor (art. 25, NBR Reg. 11/2007).

The NBR must decide on the approval of the authorization to function within at most four months from the date of receipt of the documents relating to the legal establishment of the credit institution, and further information/documents may be requested by the NBR (art. 33, EGO 99/2006).

In practice, we noted that timelines may be exceeded due to additional information usually requested by the NBR, therefore the above maximum time periods should be considered as general indicators only. Cumulatively, the preparation, NBR authorization and implementation phases may take up to one year.

Serbia Small Flag Serbia

Founders of the bank submit to the National Bank of Serbia a preliminary approval request for the bank incorporation, containing data on founders, memorandum of association and other data and documents prescribed by the law. The NBS shall render a decision on the request within 90 days. The founders of the bank are obligated to, within 60 days from the reception of the preliminary approval, submit the request for the issuance of the bank operating license to the National Bank of Serbia, containing the evidence on the payment of the pecuniary share capital, as well as the evidence on the transfer of non-monetary assets into the share capital of the bank accompanied with the statement on the assets origin, data on the organizational structure and staff qualification, as well as other data and documents prescribed by the law. The NBS shall render a decision on the request within 30 days. Bank’s Founding Assembly shall be held within 30 days form the reception of the NBS decision on the issuance of the bank operating license. Founding As-sembly is to (i) adopt Articles of Association, (ii) appoint president and members of both the Managing Board and Executive Board, (iii) adopt three-year action plan, (iv) adopt business policy, and (v) adopt the initial shares emission decision. Bank founders are obligated to submit the bylaws adopted on the Founding Assembly to the National Bank of Serbia for approval within five days, and after the reception of the ap-proval, they must submit the application for the registration of the bank into the Companies Register within 30 days. The bank acquires the status of a legal entity at the moment of registration into the Companies Register. The banking license application process lasts approximately 90 days on average.

United Kingdom Small Flag United Kingdom

An institution wishing to become authorized as a bank in England and Wales will need to be authorized to do so by the PRA and become regulated by both the PRA and the FCA. While the PRA make the final decision on an application, the PRA can only authorise a new bank with the FCA’s consent.

The process involves a pre-application phase which the regulators recommend to commence discussions before submitting an application for authorisation. The PRA will initially focus on the following areas:

  • Business plan
  • Senior management, the board and governance
  • Financial resources
  • IT strategy
  • Outsourcing

The PRA recommend a series of at least four pre-application meetings with papers for each submitted at least 10 days in advance.

This is then followed by submitting a formal application for the PRA to consider and use to decide whether to authorise the new bank. At this stage, detailed forms are submitted and an application fee of £25,000 is payable. The PRA will commence its review and assessment and aims to revert with its initial response within eight weeks which will include reverting on required capital and liquidity levels.

Note that the first assessment the PRA will make is whether the application is complete or not. This affects the statutory deadline by which the PRA must make a decision on the application which is a six month statutory deadline to assess an application that has been deemed complete and a 12 month statutory deadline to assess an application which has been deemed incomplete.

Authorisation is then further followed by mobilisation – an optional stage where the new bank, once authorised, completes its set up before starting to trade fully.

United States Small Flag United States

Generally, bank charter applications take approximately six months to a year to be approved. The approval process for banks is detailed, with chartering agencies generally looking at financial pro formas, the qualification and character of proposed management and directors, the bank’s business plan, capital adequacy, convenience and needs to the communities to be served and other factors. If a de novo institution wishes to engage in trust activities, it often must separately apply for trust powers. State banks that wish to be members of the Federal Reserve System must apply to the FRB for such membership. Depository institutions also must apply to the FDIC for deposit insurance. Deposit insurance has proved a nearly insuperable obstacle to new depository institution applications in recent years, although the FDIC approved fifteen applications during 2018, double its rate from 2017, which may mark a long-term change in policy.

Italy Small Flag Italy

The authorisation can be required by newly incorporated companies or by existing companies. The application must be submitted to the Bank of Italy (Regulations and Macroprudential Analysis Directorate, New Banks and Financial Intermediaries Division) and the ECB has become ultimately responsible for granting banking licenses to banks.

At the end of the investigation phase:

(i) if the applicant does not meet the regulatory authorisation requirements, the Bank of Italy can reject the application without requiring any decision by the ECB;

(ii) if the Bank of Italy is satisfied that the application complies with all conditions laid down in the relevant national law, it will draw up a draft decision to grant an authorisation and send it to the ECB. The ECB then has 10 working days (with the option of extending this deadline by another ten days) to assess whether it agrees with the draft decision. If it does, a positive authorisation decision will be notified to the applicant.

The applicant shall attach to the request of authorisation, inter alia:

(i) the deed of incorporation (atto costitutivo) and the bylaws (statuto);

(ii) a “program of activity” concerning the initial activity. In case the applicant is an existing company, it must include also the activities previously carried out, the financial statements of the 3 previous years and the initiatives which it intends to promote;

(iii) the list of subjects who participate directly or indirectly to the corporate capital of the bank;

(iv) the documentation necessary in order to verify the requirements of professionalism, independence, respectability, operational expertise of the subjects who acquire, directly or indirectly, major participations in the bank;

(v) the certification of the payment of the capital, released by the bank where the payment has been made;

(vi) information on the sources of the amounts with which the corporate capital of the bank is subscribed;

(vii) the description of the group of companies to which the bank belongs (if any).

In any case, the Bank of Italy releases or denies the authorisation within 180 days from the receipt of the request for authorisation and of all the documentation required by the law (this term could be extended by the Bank of Italy if it requires further documentation and information).

Thailand Small Flag Thailand

The FIB Act provides a general application process for applying for a commercial banking license. The commercial banking business may be undertaken only by a juristic person which is a public limited company after obtaining a license from the Minister with the advice of BoT. In granting such license, the Minister may prescribe such rules as are deemed appropriate.

Filing an application for formation of a public limited company under the law on public limited companies to undertake the business under the first paragraph requires the prior approval of the Minister.

After incorporation of the public limited company, it must file with the Minister through the BoT an application for a license according to the form prescribed in the notification of the BoT.

The application for and issuance of a license shall be in accordance with the rules and subject to payment of fees as prescribed by the Minister in a notification with the advice of the BoT.

It is not possible to determine an average timing, as it depends on the economics and policy of the Minister and BoT whether there should be any new commercial bank in Thailand and in which category. Moreover, it will also depend on the quality of the initial application paperwork and the overall merits of the application, as determined by Minister and BoT. Based on past experience, it would be prudent for an intended applicant to allocate between 6 to 12 months for the entire process.

Slovenia Small Flag Slovenia

A request to issue authorisation to provide banking services must be submitted to the Bank of Slovenia. To obtain authorization, an applicant must go through a formal process, which includes the completion of required application forms and the submission of supporting information. The particular forms that must be completed for submission to the regulator depend on the nature of the regulated activities being conducted.

The application form must include, among others, the following information/documentation:

- a bank’s articles of association,
- a bank’s business plan for the first three years of operations,
- a list of persons who will obtain a qualifying holding in the bank and the amount of each holder’s qualifying holding,
- a list of the persons who will be in a close relationship with the bank,
- other evidence demonstrating that the conditions to issue authorisation to provide banking services have been met.

The Bank of Slovenia must assess the respective request within six months from the receipt of the request. If the Bank of Slovenia has called on the applicant to eliminate deficiencies, the deadline of six months applies from the moment those deficiencies were eliminated.

The Bank of Slovenia can reject the mentioned request if requirements regarding the legal status, the internal governance arrangements or the conditions for effective supervision of the bank are not met. If there exist no reasons for the rejection, the Bank of Slovenia submits a draft decision to grant the authorisation to the ECB, where the decision-making process with respect to the request continues in accordance with Regulation (EU) No. 1024/2013. ECB can either adopt the proposed draft decision or objects to it, whereby the Bank of Slovenia must comply with ECB decision.

Updated: May 14, 2019