Obtaining a banking licence in the UK is a task that requires a thorough understanding of UK law. The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are responsible for regulating banking in the UK.

Obtaining a bank licence in the UK

To open a bank in the UK, you must be authorised and approved by the PRA. Regulators define deposit taking as a core regulated banking activity. This is in line with the EU regulatory framework, where only depositaries are 'credit institutions' under EU law, although CRD IV also applies to investment banks and some asset managers. Before setting up a bank in England, it will be useful for you to know that other regulated activities include, amongst others:

  • Issuance of electronic money.
  • Investment-related activities, including dealing (as principal or agent), transacting, managing, protecting and administering, and advising on certain investments.
  • Consumer lending and certain related assets.
  • UK residential property secured lending and other housing finance.
  • Insurance broking.

Adjustment of the banking sphere in the UK encompasses oversight of consumer credit transactions. Modalities of lending entailing financial instruments (like securities, funds, or derivatives) are predominantly supervised under the Markets in Financial Instruments Directive II (MiFID II).

A repository that is sanctioned to receive deposits must be accredited to furnish remittance amenities in the UK under the PSR or accredited to dispense electronic currency under the EMR. Under the Capital Requisites Directive (CRD), specific banking activities are subject to reciprocal acknowledgment by EEA member nations (a procedure recognized as "passporting").

Peculiarities of bank licensing in the UK

The institution of a depository in the UK necessitates the sanction of both the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA). The PRA possesses the prerogative to sanction a nascent pecuniary entity solely subsequent to endorsement by the FCA. The authorization process encompasses myriad stages:

  1. Pre-registration interpellation: To inscribe a depository in the UK, the nascent contingent must sufficiently evince to the supervisory magnates that the indispensable muniments are in situ to institute and felicitously administer a regulated commerce. The progenitors must furnish a commercial schema and delineate the amenities they will proffer. It is pivotal to contemplate fiscal means, investment stratagems, IT stratagems, and extant requisites when procuring a UK banking prerogative.
  2. Acquiring sanction with limitations. The entity must furnish:
    • Business Plan.
    • Recuperation and dissolution scheme.
    • Monetary reserves manuscripts (pecuniary (ICAAP) and fluidity (ILAP)).
    • Sketch of proffered regimen of governance/board of governors/ higher echelon, functions of higher echelon.
    • An explication of the informatics systems.
    • A robust subcontracting scheme.
    • A manuscript delineating wellsprings of finance, embracing capital sufficiency.

To petition for a bank charter in England, you must assemble a venture scheme delineating:

  • statistics on commodities/services, objective demographic;
  • competitive edges of the establishment, validated by pertinent market investigation;
  • monetary appraisal (for the ensuing 5 years);
  • approaches to surveillance and hazard administration;
  • strategies for upholding commercial persistence;
  • exact particulars concerning the anticipated governed operations.

In terms of IT, it behooves to evince that those intrigued in instituting a bank in England can efficaciously deploy a potent IT infrastructure, surveil it, and ascertain the safeguarding of all data. A 'interim' bank permit will be bestowed 6-8 moons post petition if the overseers are content that the petitioner possesses ample means to inaugurate a banking establishment in the UK and manage it.

  • Mobilisation: Once a plea for a bank permit in the UK has been sanctioned, it is imperative to consummate a progression to conclude certain constituents. To secure a bank permit in England, one must adhere to the regulations delineated in the FCA and PRA doctrines. This phase can span up to 1 year. Mobilisation encompasses:
  • the comprehensive capitalization of the banking establishment;
  • finalizing the endorsement progression for superior governance and personnel tutelage;
  • constructing frameworks such as risk-oriented administration, internal scrutiny;
  • execution of informatics systems;
  • fulfillment of subcontracting.

IMPORTANT: if you plan to use words such as 'bank' or 'banking' in your institution's name, FCA approval is required.

Requirements for obtaining a banking licence in the UK

To solicit for a banking franchise in the UK, the subsequent prerequisites must be satisfied:

  1. A commercial entity sanctioned in Britain must have its central office enrolled in Britain.
  2. An aspirant for a banking charter in Britain must conduct its affairs sagaciously, which encompasses possessing sufficient pecuniary and non-pecuniary assets. The aspirant's non-pecuniary assets must be pertinent to the governed operations it endeavors to carry out, taking into consideration the FCA's operational aspirations.
  3. The supplicant must gratify the Regulator that it possesses the requisite erudition, considering all the contingencies, to execute the prescribed endeavor. The supplicant's stewardship must encompass pertinent adeptness and comport in probity. The supplicant must possess fitting protocols and methodologies in situ and navigate conflicts of concern judiciously.
  4. The supplicant's commerce paradigm must not engender jeopardy to the FCA's objectives.
  5. The supplicant must be proficient in being competently monitored by the PRA and the FCA. Any intimate affiliations of the supplicant must not obstruct efficient oversight of the supplicant.
  6. A significant criterion for evaluating eligibility for a UK bank authorization is the Senior Managers and Certification Regime (SMCR). Authorized entities will scrutinize the top brass of a potential bank to ascertain that they possess suitable credentials and expertise in high-ranking roles. Leaders of UK banks who hold ultimate accountability for one or more high-level managerial duties must receive prior approval from the PRA and/or the FCA before assuming the SMF (encompassing, among others, the positions of principal executive, principal hazard overseers, internal scrutiny, adherence, and technology, as well as leaders of specific business sectors).
  7. The chieftain must be situated in the United Kingdom whilst conducting regulated endeavors therein.
  8. The progenitor may be a singular individual and there exists no residency stipulation.
  9. There must further be a designated officer through whom communication with the regulator can be upheld.
  10. It is not feasible to procure a permit for regulated undertakings in the United Kingdom sans establishing a tangible office therein.
  11. The quantum of stock capital hinges on the breadth of the enterprise's pursuits.

The particulars of the fresh depository are inputted into the Financial Services Register starting from the date of its sanction. If the plea is spurned by the regulators, a notification will be dispatched to the petitioner elaborating the pinnacle prerequisites that have not been fulfilled. It is feasible to re-petition for a UK bank accreditation.

It is viable to procure adept aid in securing a UK banking accreditation directly from devoted UK connoisseurs.

Foreign applicants

Financial institutions with authorization in EEA member states other than the UK are allowed to engage in commerce in Britain on the grounds of their home state banking permit under the CRD passporting regime without the necessity to procure a distinct UK banking permit. Passporting is contingent upon a notification protocol between the EEA bank, the EEA home state overseer, and the PRA as the host state overseer. EEA banks may also function by inaugurating a branch in the UK. Non-EEA banks integrated outside the EEA are allowed to execute commerce in Britain through a locally sanctioned branch.

Specialist counselling

If you wish to amplify your enterprise or establish a fresh pioneering depository in the UK, you must solicit a bank charter from the PRA and FCA.

Sanction for pecuniary amenities in the United Kingdom is a convoluted procedure that necessitates a comprehensive grasp of the requisite measures. TK Deal specialists proffer patrons counsel on the governance of the pecuniary sector in England and comprehensive backing in acquiring a bank charter in the United Kingdom.