WALLESS Weekly Review
Please note that the review is in Lithuanian.
After our clients Mano Bankas and Revolut obtained the first specialized bank licenses at the end of 2018, the opportunity of a banking license in Lithuania continues to attract increased attention of new market entrants, including credit unions, consumer credit and payment services providers as well as other fintech players.
WALLESS team assists 4 out of 5 applicants for bank licenses that are currently being assessed by the Bank of Lithuania and the European Central Bank (including one application for a full service bank license).
About a specialized bank
As of 1 January 2017, a concept of a specialized bank has been introduced into the Lithuanian legal framework. Specialized banks are subject to the same legal requirements and have the same license passporting possibilities as other commercial banks, except that:
Specialized banks operate as licensed and supervised credit institutions and are entitled to offer such financial services as, including, but not limited to, (i) taking deposits and other repayable funds; (ii) lending (including credit agreements relating to immovable property); (iii) financial leasing; (iv) payment services; (v) creditworthiness assessment services; (vi) currency exchange (in cash); (vii) issuing of e-money.
Specialised bank license is capable of being passported across the European Economic Area.
In order to avail of the benefits of having a banking license, the specialized bank has to comply with all regulatory requirements applicable to banks in Lithuania. This means that a specialized bank will have to, amongst others, undergo licensing procedures (including assessment of the bank’s shareholders and management), have appropriate internal organization, processes, risk management and internal control procedures to ensure bank’s sound and prudent activities, comply with regulatory reporting and capital adequacy requirements, procure internal and external audit.
In order to obtain a specialized bank license, a company would need to submit to the Bank of Lithuania an application for licensing appended with a package of documents to be assessed by the Bank of Lithuania and the European Central Bank (ECB), including the following:
The documents may be submitted to the Bank of Lithuania in Lithuanian or English languages. Where the documents are prepared in Lithuanian, there is no requirement for the applicant to translate them into English, however, doing this would significantly save time as, having received the documents in Lithuanian, the Bank of Lithuania would need to itself procure the translations of the documents submitted, as they need to be presented to the ECB (in English).
The licensing application is to be submitted to the Bank of Lithuania, however, the decision to issue a license is granted by the ECB. Under the law, the license is to be granted within 6 months after submission of all required documents, however, extensions are possible. In any case the maximum term during which the regulator shall adopt its final decision is limited to 12 months.
Issuing of a license is subject to payment of a licensing fee of EUR 4,157.
Other costs involved in the licensing process would be fees of the legal advisors and other consultants assisting with preparation of the licensing documents, also notarisation and translation fees.
Once the bank starts its operation, the bank shall be subject to the following regulatory fees:
In order for the bank to offer payment services, including issuing and acceptance of payment cards, the bank needs to access the relevant payment systems (such as TARGET-2 and SEPA), enter into agreements with payment cards organisations (VISA, MasterCard or other), which is a separate line of work and can be performed in parallel with the licensing process.
To learn more please contact our partner Joana Baublytė-Kulvietė
+370 687 14642