Obtaining authorisation is a regulated process whereby you can become a participant of Latvia’s financial market and commence business after obtaining authorisation.
A legal person that has obtained authorisation from the European Central Bank (hereinafter - the ECB) has the right to provide banking services according to the Credit Institution Law.
The credit institution is a capital company, which accepts deposits and other repayable funds from an unlimited customer base, issues credits in its own name and provides other financial services. The difference from other financial services providers is based on the exclusive right to accept deposits from natural and legal persons. The founders (shareholders) of a credit institution can be both, a natural or legal person (hereinafter - the entrepreneur). In case a legal person intends to issue credits to natural persons, such person should consult the Consumer Rights Protection Centre.
Qualification requirements for a credit institution, its shareholders and officials:
- persons involved in the management of a credit institution (management board and supervisory board members, key function holders) have impeccable reputation, adequate education and experience to manage the credit institution;
- shareholders holding 10% or more of their share capital or voting rights (or group of shareholders each having less than 10% and the group acting in concert regarding the management of a credit institution) have good repute, professional experience, financial stability and sufficient financial resources to ensure further operations of a credit institution;
- the initial capital should be EUR 5 million.
The process of obtaining authorisation comprises several steps:
- Preparation for the submission of application
- Submission of application
- Assessment of application
- Receipt of authorisation
Preparation for the submission of application: an introductory stage, during which Latvijas Banka organises a meeting with an entrepreneur to discuss its planned activities. At this stage, the credit institution does not necessarily have to be established yet. What does the entrepreneur do? What does Latvijas Banka do? What should be taken into account? Documents to be submitted: Costs Preparation of the application for the submission and provision of advice by Latvijas Banka are free of charge. Submission of the application: An entrepreneur prepares and submits the application for authorisation. What does the entrepreneur do? What does Latvijas Banka do? What should be taken into account? List of documents to be submitted As each of a founder of a credit institution is unique and a credit institution seeks for its own special niche in the market, the list of documents to be submitted together with the application differs due to the specific business model of each credit institution. Nevertheless, at the base there are common principles and documents that can be divided in five core groups afterwards adjusted to the entrepreneur’s business model. The authorized person of credit institution founders submits an application for authorisation. The application is accompanied by: Foundation documents 1) Section 15, 16, 17 of Credit Institution Law 2) Provisions of FCMC Regulations No 200 of 27.10.2020 Procedures of Submission the Information and Documents for Obtaining Licence, Permits and Confirmations Regulating the Operation of Credit Institutions and for the Provision of Information (Licencing Regulations) Information and documents regarding founders/shareholders 1) Section 28 and 29 of Credit Institution Law 2) Provisions of FCMC Regulations No 92 of 14.07.2020 List of Information Required for Notification of the Acquisition or Increase of a Qualifying Holding and General Principles and Procedure for the Examination of Notification Information and documents regarding officials 1) Section 24 and 25 of Credit Institution Law 2) Provisions of FCMC Regulations No 201 of 27.10.2020 Procedure for the Submission of Information and Documents for the Assessment of Suitability of Officials of Credit Institutions In addition to that the entrepreneur shall be acquainted with the following documents in order to fully prepare the information on officials that comply with the legal provisions: 3) Provisions of FCMC Regulations No 94 of 14.07.2020 Regulation on the Assessment of the Suitability of the Executive and Supervisory Board Members and Key Function Holders 4) Provisions of FCMC Regulations No 227 of 01.12.2020 Regulation on Establishment of the Internal Control System The contents of a business plan is described in EU Regulatory Technical Standards. Base internal procedures and policies to be submitted: The number and type of these documents depends on the operation of a credit institution in accordance with the envisaged business plan and legal framework (thus the list is illustrative): Other recommendations: To prepare the documents in good quality Latvijas Banka recommends reviewing also: Costs The review of application is free of charge. Time limit for examining the application Latvijas Banka starts examining the application within 3 months but no longer than 12 months from confirmation that the application is complete. Assessment of application: Latvijas Banka and the ECB carry out the assessment of the application as to the substance. What does the entrepreneur do? What does Latvijas Banka do? What should be taken into account? Costs No additional costs associated with the examination of documents during the assessment stage of the application are applied. Receipt of authorisation: Latvijas Banka finalises the examination of the application and takes a decision and submits a draft proposal to the ECB. The ECB adopts a decision on granting an authorisation to carry out the activities of credit institution. The decision is made within the legal deadline. If Latvijas Banka decides on the refusal of authorisation, Latvijas Banka consults the draft with the ECB and takes a refusal decision in case of the ECB agreement to such decision. What does the entrepreneur do? What does Latvijas Banka do? What should be taken into account? Costs No additional costs associated with obtaining authorisation during the stage of obtaining authorisation. Supervision: Latvijas Banka supervises activities of the credit institution in accordance with the requirements of Latvian and European Union legal framework. What does the credit institution do? What does Latvijas Banka do? What should be taken into account? Costs After the authorisation is granted, the credit institution pays to Latvijas Banka up to 0.033 per cent including from the average amount of assets of the credit institution per quarter.
Process of obtaining authorisation
Meeting with the prospective market participants
Latvijas Banka specialists offer advice to prospective market participants to help better understand the regulatory requirements on the process of banking services, as well as to identify potential challenges in developing new and innovative products or business models. Our specialists offer:
- to clarify certain aspects of regulatory requirements;
- to advise on the application of regulation at an early stage of development of an innovative product or business model.
!!! The entrepreneur needs clearly understand what he or she intends to do, how to operate. Latvijas Banka will neither develop documentation on behalf on the entrepreneur nor improve the documentation to be in good quality. This this solely the responsibility of the entrepreneur and his advisers.
Apply for consultation.
Please apply in advance to agree on the meeting time: This email address is being protected from spambots. You need JavaScript enabled to view it., +371 67 022 300.