Credit Institution (bank licence)
Enabling you to provide full suite of banking services, including deposit-taking, lending,payment services and issuing electronic money.
A bank is regarded as a credit institution. Only credit institutions have the exclusive right to accept deposits and other repayable funds from non-professional market participants, while unauthorised provision of financial services is prohibited. Accordingly, firms seeking to receive deposits from non-professional market participants, must, prior to this, obtain a banking licence from the Bank of Lithuania.
Both Lithuania and its regulator, the Bank of Lithuania, are a pragmatic, innovative and a forward-thinking option to establish a bank. The regulator has established a new-comer programme and supports newcomers as parts of its strategy.
With an authorised bank in Lithuania, you are able to passport and operate across the rest of Europe.
Popular companies who have chosen Lithuania, include, Barclays Bank, Revolut, Western Union, Danske Bank and Swedbank, to name a few.
Get in touch
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In addition to the traditional option of becoming a bank, across Europe, including Lithuania, a more favourable option exists for Lithuanian and foreign startups seeking to begin providing various financial services in the European Economic Area. The key feature of a specialised bank is the minimum capital requirement of EUR 1 million, while for a traditional bank it is EUR 5 million. A specialised bank is a credit institution, which has the right to receive deposits, lend funds, provide transfer of funds and other usual banking services.
SERVICES A SPECIALISED BANK CAN PROVIDE
A specialised bank can provide the following services:
1. Acceptance of deposits and other repayable funds;
2. Lending (including mortgage loans);
3. Financial leasing;
4. Payment services;
5. Issue and administration of travel vouchers, bills of exchange and other payment instruments.
6. Provision of financial guarantees and financial guarantees;
7. Financial intermediation (agent activities);
8. Money management;
9. Creditworthiness assessment services;
10. Rental of safes;
11. Currency exchange (in cash);
12. Issuance of electronic money.
The approach of the Bank of Lithuania to the authorisation process for banks, as well as for other institutions, is, as far as possible, an open one and normally begins well before an application for an authorisation is submitted.
There are 4 stages in the authorisation process:
1. The pre-application stage: we make a formal introduction to the regulator on your behalf.;
2. Submission of an application to the Supervision Service of the Bank of Lithuania: the Supervision Service, within 5 business days, accepts the application for consideration;
3. Assessment of an application and attached documents: the Supervision Service, after starting the assessment procedure for the application and submitted documents, transfers all data to the European Central Bank (ECB). Since that moment, the Supervision Service and the ECB together in parallel assess the submitted documents. Where the documents submitted have no deficiencies, the licence is issued within the shortest possible 6 month-term. From experience however, considering the scope and seriousness of thus licence, the Supervision Service usually requests additional information or documents.
4. Issuance of a licence or refusal of authorisation: after assessment of submitted documents is completed, the Bank of Lithuania formulates its conclusions and submits them to the ECB, which takes the final decision regarding granting of an authorisation.
KEY REQUIREMENTS FOR AUTHORISATION
As part of its assessment of the authorisation application, the regulator will pay particular to the following key areas:
fitness of submitted documents;
compliance with the minimum capital requirement for banks: according to the provisions of Regulation (EU) No 575/2013, the equity capital of a bank must be not less than EUR 5 million, of a small specialist bank – EUR 1 million;
fitness and propriety of the firm and its shareholders or holders of voting rights: entities acquiring (holding) a qualifying holding in the bank’s authorised capital and/or voting rights or, in the absence of such persons, founders acquiring (holding) the major part of the authorised capital and/or voting rights (where the legal person is already established – the shareholders) must have sufficiently high repute and be financially sound;
fitness and propriety of the firm’s management: the management must have sufficiently high repute, the qualification and experience that would allow them to adequately perform their duties (in addition, at least one head of the bank’s administration must know the Lithuanian language and permanently reside in Lithuania);
The operating plan must correspond to the possibilities of the bank’s founders (shareholders or holders of voting rights) to implement it, while the prospective bank must, at the time of authorisation, be prepared to provide financial services in a safe and sound manner.
The articles of association, operating plan, management and organisational structure, risk management system, remuneration policy and practice, accounting system, internal control system, technical, information and technological security means, premises, insurance of property of a bank applying for a licence must ensure safe and sound activities of the bank and comply with the relevant legal acts. The bank must also meet other requirements set by the Law on Banks, including the requirements for legal form, minimum capital, and registered office.
The equity capital of a bank must be not less than EUR 5 million, and for a specialised bank the amount is EUR 1 million.
The capital of the bank being established may be formed during the examination of the application for a licence.
HOW WE CAN HELP YOU
End-to-end bank licence application preparation and support. Full management of communication with the regulator until your license has been issued.
Full compliance support
We focus on your compliance so you can focus on your business and its growth. We offer 2 levels of compliance support packages to support you in areas including risk, compliance and auditing.
Full support and management
Full consulting support
From helping you obtain the right technology partners to ensuring adequate and suitable software, management, employees, and strategy are put in place.
Our partnership with you extends to consulting services, including legal, accounting, recruitment, business development, product development and market strategy.
OUR BANK LICENCING SERVICE PROCESS. STEP BY STEP
Assessment & Suitability
We listen to you to understand your business, your customers and your requirements.
Planning & Execution
We advise you on business requirements and agree a course of action. We advise you on your regulatory requirements, fees and timescales involved.
We work closely with you in understanding your organisation and its processes. We project manage your application. Finally, we help you to submit your application.
Application Approval & Licence is issued
We hear back from the regulator who is likely to have further questions. We prepare the response and manage communication on your behalf. Your application is approved.
Our service extends beyond licencing and compliance. We spend significant time understanding our clients, their culture, ambitions and roadmap. We understand where they are and where they want to be and achieve. We help them achieve this transition. In addition to our above services, we help our clients with related and third-party services, to enable them to offer financial services.
With our licence authorisation service, we will discuss your requirements and the financial services you wish to offer. We will assess your business model, directors and senior management team, their experience and suitability as well as your governance (risk & compliance), operations, structure, business model and viability, to ensure that you will meet the regulator's requirements. Following our assessment, we will provide you with a realistic and honest assessment on application strength, as well as making our recommendations.
The bank licence application requires careful planning and in-depth preparation. A large amount of documents are required to be drafted, including a business plan, programme of operations, risk and compliance policy and framework, security procedures and policies, anti-money laundering etc. We are able to help you prepare all the required policies, procedures, and documents to ensure you achieve authorisation and avoid any delays in doing so.