What is the general application process for bank licenses and what is the average timing?
Banking & Finance
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.
The application process may be initiated by submitting the filled out, online application form that is available on the website of the HNB. Annexes prescribed by law shall also be submitted together with the application form. Amongst others, the following documents shall be submitted in connection with the application for the establishment of a bank: (i) founding documents; (ii) the document which defines the proposed area of operation (nationwide or limited to a specific region); (iii) proof of having fifty % of the initial capital paid up by the founders; (iv) drafts of the financial institution’s organizational and management structure, decision-making and control mechanisms, and its organizational and operational procedures; (v) proof of compliance with statutory requirements regarding personnel and infrastructure; (vi) certain documents and information to be provided in connection with the founder. Within six months following receipt of the authorization of establishment the applicant may apply for the operating license. For an operating license amongst other the following documents shall be submitted: (i) proof of actual payment and further evidences on compliance with the purpose of such payment in connection with the initial capital; (ii) information for the identification of each shareholder of the credit institution with minimum five % share or voting right; (iii) business plan; (iv) standard service agreements, (v) statement on the proposed date for the commencement of operations; (vi) a copy of the letter of intent of admission sent to the National Deposit Insurance Fund (in Hungarian: Országos Betétbiztosítási Alap); (vii) a statement on having the necessary facilities in place to comply with data disclosure obligations, as well as the results of live tests of the computer programs used for such disclosure of data; (viii) the draft of the accounting policy and detailed accounting system; (ix) a statement concerning direct connection to any payment system between credit institutions and an auditor’s certificate concerning the information technology system providing this connection, or a statement concerning the acceptance of an indirect connection; (x) a statement on joining the central credit information system; (xi) the rules of procedure; (xii) organizational structure, and regulations system of management. As for the timing, the general procedural time-limit is 3 months for each license separately (establishment and operation) but such time limit may be extended with 3 additional months in cases of applications relating to foundation-, operation- (activity), merger or diversion.
In Latvia, a bank may be founded only as a joint stock company (JSC) (i.e., public company, the shares of which may be publicly tradable).
A newly founded bank prior to recording thereof in the Commercial register shall submit to the FCMC an application for the receipt of a licence. Registration of the bank in the Commercial register shall be carried out only after the decision of the FCMC to issue a licence for the operation of a bank has been submitted to the Commercial register.
The founders of the bank shall organise payment of money into a temporary account at the Bank of Latvia and shall fully prepay the founding equity capital of the bank until examination of the application to the FCMC for the receipt of a licence. The founding equity capital of the bank may only be deposited in money.
The FCMC shall examine an application for the issuance of a licence within three months after receipt of all the necessary documents; however, not later than within 12 months from the day when the application for the receipt of a licence was received. There is, however, no publicly available information on average timing for application process for the receipt of a banking licence.
The initial capital of a bank shall be not less than five million euros.
The application process consists of the following key stages:
- the pre-application stage: introducing the representatives of a prospective bank to the regulation applied in Lithuania, pre-application meetings and discussions with specialists of the Bank of Lithuania
- submission of an application to the Bank of Lithuania, which within 5 business days reviews whether all necessary documents have been submitted and, where no formal deficiencies are identified, accepts the application for consideration;
- assessment of an application and attached documents: BoL, after starting the assessment procedure for the application and submitted documents, transfers all data to the European Central Bank (ECB). Since that moment, BoL and the ECB together in parallel assess the submitted documents. Where the documents submitted have no deficiencies, the license is issued within 6 month-term. Nevertheless, our experience shows that submitted documents in only exceptional cases do not contain deficiencies of some sort; therefore, the BoL usually submits comments to the applicant, asking to submit additional information or documents. In that case, the timeframe for assessment is extended;
- issuance of a licence or refusal of authorisation: after assessment of submitted documents is completed, the Bank of Lithuania makes its conclusions and submits them to the ECB, which takes the final decision regarding granting of an authorisation.
Legislation provides that a banking application must be assessed within: 1) 6 months of submission of proper and sufficiently informative documents; 2) within 12 months of submission of a banking application, where the submitted documents are not full or are deficient.
To set up a bank in Poland two licenses must be obtained from the Polish FSA:
- a license to establish a bank; and
- a license to commence banking operations
The average timing to obtain the first license is six months and for the second license it is three months.
A credit institution (incorporated as a Romanian legal entity) may be established and may operate in Romania only based on the authorisation issued by the NBR.
The general authorisation process comprises two stages: (i) obtaining of the establishment license of the credit institution, and (ii) obtaining of the functioning license (i.e. the license based on which the credit institution may start operating in Romania).
For each step of the authorisation process, it is necessary to submit with the NBR an application form along with all the statutory documents and information. The NBR shall decide on the establishment license (i.e. granting or rejection the establishment license) by not later than the date falling four months from the date of such application. During this period, but no later than three months after the application date, the NBR may request in writing any additional information or documents.
Upon the NBR’s decision to grant the establishment license, in order to obtain also the functioning license, the credit institution shall submit with NBR within two months from receiving the establishment license, the documents certifying its legal establishment (i.e. the registration with the National Trade Register Office).
The NBR decides on granting the functioning license within a period that does not exceed four months from receiving the aforementioned documents (additional documents and information may be requested in the process).
All banks in India, whether domestic or foreign, need to obtain a banking license from the RBI in order to commence operations. The RBI grants the license pursuant to the BR Act and the guidelines issued for ‘on tap’ licensing (On Tap Guidelines). The On Tap Guidelines mark a shift from the previously adopted ‘stop and go’ licensing approach (under which the RBI would notify a window during which an entity could apply for a license).
The form of application to be made is set out in the BR Act and requires the company to submit a copy of its constitutional documents, a business plan, a project report setting out details such as the business potential and viability, composition of loan portfolio, proposal to meet priority sector requirements and likewise.
For further information on the eligibility for ownership and control over banks please see our responses to question 16 below.
The process of obtaining a fresh banking license takes a significant amount of time, possibly between 2 to 4 years, although it is hoped that recent activity in this sector and stringent guidelines for resolving applications set by the RBI itself will result in this time frame reducing considerably.
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.
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. The application can be withdrawn by written notice to the MFSA at any time before it has been granted or refused.
In order to be able to grant a banking licence the MFSA must be satisfied that the minimum criteria relating 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 prospective 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 shareholders 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 require 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 information submitted as part of the application pack.
The MFSA must determine an application for a licence within six 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 compliance 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 within twelve months.
The application process for applying for a banking licence in Nigeria, involves 3 stages:
Grant of approval in principle (AIP)
This requires a formal application to the Governor of the CBN for the grant of a banking license, accompanied with the following documents;
a. a feasibility report of the proposed bank (contain information on the ownership structure, detailed bio-data resume of shareholders, an undertaking on capital adequacy; in the case of a corporate investor, it’s certificate of incorporation and board resolution; the objectives of the bank; the branch expansion programme; its staff training programme; the IT programme, etc;
b. a draft copy of the Memorandum and Articles of Association (Memart) of the proposed bank;
c. details of the shareholders, directors, and principal officers of the proposed bank and their particulars; and
d. the prescribed application fee, as well as other information required by the CBN from time to time.
Upon submission of the above requirements, the promoters of the proposed bank shall then deposit with the CBN a sum equal to the minimum paid-up capital, upon which the Governor of the CBN may issue the AIP license (with or without conditions) or refuse to issue the license. It is important to note that before the grant of an AIP, the applicant must be registered as a company with the Corporate Affairs Commission (CAC). The CAC aims to incorporate a company within 2 days of submission of proper incorporation documents, however, in practice, incorporation should be finalized within one week.
Grant of Final License
Within 6 months of granting the approval in principle, the promoters are required to submit an application for the grant of a final license, accompanied with the following documents:
a. the CBN prescribed licensing fee
b. 3 certified true copies of Certificate of Incorporation of the bank, memorandum and articles of association of the bank, statement of allotment of shares, particulars of directors of the bank and details of the location of head office/branch building;
c. evidence of availability of strong room, loading bay and banking hall facilities;
d. evidence of availability of bullion lorries with necessary security gadgets;
e. evidence of installation of I.T. facilities; and
f. details of letters of offer and acceptance of employment of the management team.
Pre-commencement of operations requirements
Upon the grant of a final banking license by the CBN, the bank is then required to submit the following documents before commencing business in Nigeria;
a. evidence of admission into the clearing house;
b. copy of Shareholders register;
c. copy of share certificate issued to each investor;
d. draft copy of opening statement of affairs signed by the directors and auditors;
e. evidence of insurance coverage and the insurance policies;
f. evidence of readiness of cheques and other security documents;
g. minutes of pre-commencement board meeting;
h. evidence of adequate security arrangements.
An application for a banking licence is usually prepared by the company's legal counsel and must be submitted to the NFSA. The application letter must demonstrate that the applicant complies with the requirements in the Financial Undertakings Act.
The application must include the applicant's certificate of registration, articles of association and a business plan. The business plan must include information about the applicant's planned operations and, in particular, provide information regarding material aspects of the regulated activities that the applicant intends to undertake upon receipt of its license. The NFSA may at any time demand further information, and the Financial Undertakings Act recommends that the following information is included in each business plan:
- The applicant's planned ownership and management structure after establishment.
- The applicant's risk management and risk control systems.
- Information regarding how the applicant will acquire capital to satisfy applicable capital requirements for the activities covered by the business plan.
- The applicant's solidity and capital status, as well as financial projections for the first three years following the taking-up of the regulated activities.
- Budgets for establishment and administration costs.
- Budgets including an income statement, balance sheets and a financing analysis for the first three years following the taking-up of the regulated activities.
- The applicant's group affiliation, if any.
- Overview over the financial services the applicant intends to provide.
- The applicant's anti-money laundering measures comply with the Anti-Money Laundering Act.
There is no application fee payable for the submission and processing of a banking license application.
The final decision on granting the licence is made by the either the NFSA or the MoF, depending on case-specific factors.
The MoF must make a decision within six months of receipt of a full and satisfactory application.
Overall, the general application process for the issuance of a banking license is divided in two phases: (i) authorisation phase and (ii) registry phase.
Firslty, 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 management of the credit institution.
Additional information may be required by Banco de Portugal.
The applicants must be notified of the decision within 6 months of the receipt of the application 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 hampered 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 enforcement;
h) the members of the management and supervisory bodies do not comply with the reputation, professional qualification, independence or availability requirements set out by applicable 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 ciurcumstances where the authorisation may be withdrawn by Banco de Portugal.
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 average time for a banking application process is between a year and a year and a half.
Banking License Application Process and Forms
The general application process for a bank licence in Qatar requires an application for a licence to be submitted by the applicant or his legal representative to the competent department at the QCB, together with all supporting documents and information.
In accordance with QCB Law different forms shall be used for applying to QCB for obtaining licenses to commence business for banks and their local and outside branches according to the requirement stated in those forms.
- License Application Form - National Bank (Form (A) - Banks), annex no. (25).
- License Application Form - Foreign Bank’s Branch in Qatar - (Form (B) - Banks), annex no. (25).
- License Application Form - Branch inside Qatar – (Form (C) - Banks), annex no. (25).
- License Application Form - National Bank’s Expansion outside Qatar – (Form (D) - Banks), annex no. (25).
Granting or Rejection of licensing application
The competent authority at the QCB shall examine the licence application and its annexes to verify that it satisfies the conditions that must be met, and may order any amendments it deems necessary for the application to be eligible for consideration.
The applicant may, prior to the competent authority's decision, withdraw or amend the application in accordance with the rules and procedures established by the QCB.
Where the Governor rejects the application, he shall serve a notice to the applicant of the reasons for such decision. The applicant may appeal such decision to the Board within fifteen (15) days from the date of notification.
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 the QCB Law and the regulations and decisions issued in implementation thereof, according to the public interest requirements and the national economy need.
The competent administration (Supervision and Control Dept.) shall promulgate the decision to grant the license in the Official Gazette and in two local newspapers, one issued in Arabic and the other in English.
The QCB may license foreign financial institutions to open branches in the State of Qatar according to the conditions and controls issued by the QCB.
In accordance with Article (88) of QCB Law, any financial institution shall commence conducting the licensed services, businesses or activities within six (6) months from the date of issuance of the license. The QCB may extend this period for another similar period. In the event of the elapse of this period without starting to conduct the licensed services, businesses, or activities, the license shall be deemed as if not issued.
Banking licenses shall be automatically renewed if the bank continues its operations in accordance with QCB Law.
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.
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:
- Incorporation in the form of a joint stock company (anonim şirket) with a minimum paid-in capital of TL 30 million;
- Shares must be registered and issued against cash ;
- Articles of association and founders shall be compliant with the Banking Law;
- Board of directors members shall be professionally qualified for the projected activities compliant with the corporate governance rules applicable to banks;
- envisaged scope of activities must be consistent with the anticipated financial, managerial and organizational structure;
- 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.
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.
The application process includes the followings steps:
- Submission of an application to BNB along with the statutory required documents and information.
- BNB completes assessment on compliance with the licensing requirements.
- BNB should take its decision within three months as of receipt of the application by either approving issuance of the license or rejecting it. In case of rejection, the applicant is entitled to file another application after the expiry of twelve months as of entry into force of the decision for rejection.
- Issuance of a license.
After issuance of a license, the applicant has to comply with additional requirements within three months.
The average timing for issuance of a banking license is six months as of receipt of the application. BNB is expected to approve or reject issuance of a license within maximum twelve months as of receipt of the application.
COMF states that the Superintendence of Banks is the governmental body in charge of the approval of any new financial entity including banks. Once the bank is duly incorporated, the Superintendence of Banks will confirm that the shares are 100% paid by the shareholders and will grant a term of 6 months in order to fulfill all the necessary conditions, including the required infrastructure, obtaining the qualification of its directors and legal representative, technological and staff requirements, etc.
The Superintendence of Banks will grant a license depending on the financial activities that will be performed by the bank, based in the active, passive and contingent operations as well as the financial services that it will provide taking in consideration the corporate purpose and the business line of each bank.
The estimate timing for this process is 6 months, with and exceptional term extension of 6 months.
Once the license is granted, the financial entity must notify to the Superintendence of Banks the estimate date for starting its operations.
Pursuant to Section 9 of CBA 1971 the ECB is the authority for granting banking licences in Ireland and applications are made to the CBI.
The principal stages in the authorisation process are as follows:
(a) exploratory phase:
- a preliminary meeting with the CBI is arranged to explore the applicant’s proposed activities and scope of the proposal;
- the CBI reviews the document proposal which is to be in same format and level of detail as an application and should include all supporting documentation. The CBI may provide comments or note further information required. At the end of its proposal review the CBI will issue a preliminary view as to whether the applicant should proceed to the formal application stage;
(b) submission of an application and assessment of the application by the ECB and the CBI:
the application form is submitted to the CBI for processing and review by the CBI and ECB. The complexity and quality of an application will determine the period of time before an application is deemed complete. The applicant’s speed of response to queries and quality of responses will affect this timeframe;
(c) decision by the ECB on whether to grant a banking licence
once review of an application has been successfully completed, the ECB will make a decision whether to grant a licence. The ECB has 12 months from the date of receipt of a completed ap-plication to make a decision on the application. If successful, an applicant will receive an author-isation certificate together with any special considerations issued.
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.
First, an application for authorization has to be submitted to the NBB and must consist of an administrative dossier which complies with the conditions laid down by the relevant supervisory authority (either the NBB or the ECB – see question 1) and which includes, inter alia, a programme of operations, the organizational structure and disclosure of links with other persons or entities. Applicants must also notify the NBB of the identity of qualified shareholders and, in the absence of such shareholders, of the twenty largest shareholders and their proportion of capital. In the meantime, and to the extent this is required, the NBB shall consult other relevant supervisory authorities. Finally, based on the opinion of the FSMA, the relevant supervisory authority shall decide on the application with regard to a) the adequacy of the credit institution’s organization and b) the professional integrity of the persons in charge.
With regard to the timing of the application process, the Banking Act prescribes that the supervisory authority shall provide its opinion within six months after submission of the complete application package and at the latest within twelve months after receipt of the application. As applications for a full license are scarce in the Belgian market, we cannot comment on the effective average timing for the treatment of an application. The last successful application known, however, took more than a year.
In order to apply for activity licence, the members of the management board of the company being founded or operating have to submit to the FSA a written application and the documents and information specified in the CIA. The processing fee has to be paid before the application is submitted. The FSA may demand the submission of additional information and documents if it is not convinced on the basis of the information and documents submitted as to whether the applicant for the activity licence has adequate facilities for the provision of financial services or whether it meets the requirements prescribed by the legislation or if other circumstances relating to the applicant need to be verified.
The FSA shall make a decision to grant or refuse to grant the activity licence within six months after receipt of all the necessary documents and information that meet the requirements, but not later than within twelve months after receipt of the application for the activity licence.
In order to obtain an operations license, interested entities must ensure that they meet the applicable minimum capital requirements. In particular, depending on the type of legal entity applying for such license, the capital amount that must be paid-up as at the time of a license application is filed has as follows:
- For credit institutions: € 18million
- For branches of credit institutions licensed in a third country: € 9million
- For credit cooperatives licensed as credit institutions: € 6million
Interested entities must submit to the BoG a license application, certain questionnaires and the requisite supporting documentation (eg detailed three-year business plan and articles of association). The BoG, in collaboration with the competent EU authorities, assesses the merits of the application and may revert to the applicant for additional information, if necessary.
In any event, the BoG must revert with a decision on the license application within twelve (12) months as of the receipt of the application.
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 15 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 application process for a bank license depends on the type of bank charter and which federal or state agencies are involved in the application. Generally, bank charter applications take approximately six months 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 seven applications during 2017, which hopefully marks a long-term change in policy.
The general application process for a bank license is mainly the one stated in article 53 of the Organic Statute of the Financial System, as explained below. As stated in previous answers, in order to conduct banking activities, banks must be previously authorized by the Superintendence of Finance to be incorporated and to carry out specific financial activities.
Such process is around four (4) months, which can be suspended if the Superintendence of Finance requires further information from the petitionary. The main documents and requirements for the application are:
- A draft of the future company’s bylaws.
- Capital information regarding investment and the amount with which the company will be incorporated.
- Information stating the origin and nature of the future institution’s funds.
- Information of the persons that intend to be shareholders, members of the board of directors, legal representatives, or agents of the future company.
- A feasibility study, stating the intended activities that the future institution will perform in the financial market, technological and management infrastructure, internal control policies, a risk management plan, corporate governance structure and any other relevant information of the business plan.
- Documents authorizing the Superintendence of Finance to perform background checks on the intended future shareholders.
- Income tax returns and financial statements on the intended future shareholders from the last three (3) fiscal years.
A foreign bank may operate in Colombia through a subsidiary or a branch incorporated in Colombia, with prior authorization from the Superintendence of Finance.
The Superintendence of Finance will then authorize the requested incorporation of the company through a resolution. After which, the company must notify the Superintendence of Finance that it has been duly established and that the capital has been paid. The authority will then proceed to publish the notification as required by law, and it will issue a final resolution approving the operation of determined financial activities.
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.
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
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.