Obtaining a banking licence in Latvia can be achieved if certain conditions are met. Opening a bank in Latvia is considered a less complicated process than in other EU countries. If you want to obtain a banking licence in Latvia, you should take into account that it can be passported to provide services in other EU countries. In this overview we will analyse how to apply for a banking licence in Latvia.
Regulation of banking activities in Latvia
The banking sector is well developed in the country. Reforms implemented since 2018 have resulted in one of the most effective financial crime prevention systems.
International rating agency S&P Global Ratings (S&P) hath heightened Latvia's rating from 'A' to 'A+'. The firm's 'A+' credit rating affordeth the ancestrally highest credit rating level since 1997, when the Republic of Latvia was firstly assigned a credit rating.In December 2019, there were 16 banks operating in Latvia, including 13 credit institutions registered in Latvia and three branches of credit institutions registered in other EU countries.
Banking licence in Latvia
Obtaining a banking licence in Latvia is a permit that covers the facilitation of financial and payment services. But it is worth taking into account that this does not include activities related to loans. To obtain a licence for lending activities in Latvia, a bank submits an application to the Financial and Capital Market Commission (FCMC) together with the information and documents required by law.
Requirements for obtaining a banking licence in Latvia
The minimum initial capital requirement for the bank is five million euros. It is worth bearing in mind that the minimum and final capital requirement will depend on the business plan submitted by the applicant.
The required documentation is as follows:
- Education, professional experience of the founder.
- The applicant must be in good standing.
- A detailed CV for the last 10 years must be submitted.
- Documentation proving the origin of funds to register a bank in Latvia and obtain a banking licence in Latvia.
When applying to establish a bank in Latvia, the following procedures and rules must be submitted:
- the organisational and legal structure of the company;
- key roles and functions of employees;
- risk management and internal control policies and procedures;
- accounting principles;
- information and asset protection policies;
- AML policies;
- key employee suitability policies and others;
- a 3-year business plan and profit and loss statement must also be provided.
It should be borne in mind that candidates for the Supervisory Board members of the Management Board and other key positions must be pre-approved by the regulator.
Registration of a finance company in Latvia
In order to apply for a banking licence in Latvia, it is necessary to register a company in Latvia. Local companies can apply for a banking licence in Latvia remotely.If we talk about the legal form of the company, it must be a locally registered company in the form of a limited liability company or LLC (SIA). It takes about a week to register a company in Latvia. Once all incorporation requirements have been met, you can begin the process of gathering documentation and submitting it to the regulator for review to obtain authorisation to provide banking services in Latvia.
Timeframe for obtaining a Latvian banking licence
Within the timeframe prescribed by law, the regulator must review the application for authorisation to carry out banking activities in Latvia within 3 months from the date of submission of the application. The final decision must be made within 12 months from the date of submission of the application. As a rule, the application for a banking licence in Latvia takes 6 to 9 months from the date of its acceptance by the regulator.
Conclusion
Registration of a banking licence in Latvia allows to provide banking services in Latvia. It should be noted that, for example, lending activities are not included in the list of services that can be performed by an applicant after the registration of a bank in Latvia. The Financial and Capital Market Commission (FCMC) is the responsible authority to apply to if you wish to obtain a banking licence in Latvia. First of all, a company must be established in Latvia in order to be able to obtain a banking licence in Latvia. The FCMC regulator considers applications from local businesses. The company must be formed as an LLC or LLC (SIA).
We have described the key aspects of obtaining a Latvian banking licence. A Latvian banking regulation consultation can provide you with more details on the licensing requirements.
