Tornaritis Law Practice Areas
Banking & Finance
Tornaritis Law Practice Areas
Banking & Finance
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Banking licence application process is as follows:
- Pre-application meetings
- Application stage
- Licensing of the bank
- Authorisation for the commencement of banking business by the bank
- A credit institution must obtain authorization from the Central Bank of Cyprus before commencing operations in the Republic or abroad
- A credit institution established in the Republic must have its registered office as well as the office of its central administration in the Republic of Cyprus;
- Credit institutions shall have their head office in the Member State which issued their authorization and in which they are actually conducting their business
Overview of the process
- The law sets the minimum amount of capital for an applicant at EUR 5 million/
- The initial capital consists of one or more of the elements referred to in Article 26 (1) (a) to (e) of the Regulation (EU) No. 575/2013: (a) capital instruments, provided the conditions laid down in Article 28 or, where applicable, Article 29 are met; (b) share premium accounts related to the instruments referred to in point (a); (c) retained earnings; (d) accumulated other comprehensive income; (e) other reserves;
- The Central Bank may authorize specific categories of credit institutions whose initial capital is less than that provided for in subparagraph (1), provided that the following conditions are fulfilled:
- The initial capital is not less than one million Euros (€ 1,000,000)
- The Central Bank shall inform the Commission and the European Banking Authority of the reasons for making use of this option
- Where the Central Bank refuses to grant an authorization for starting business to a credit institution, it shall notify the applicant in writing of its decision and the reasoning of the decision within six (6) months from the date of receipt of the application or, if the application is not complete, within six (6) months from receipt of all the information required to make a decision.
- In any event, a decision to grant or refuse an authorization shall be issued within twelve (12) months of receipt of the application.
- A licensed credit institution may return its license by written notice to the Central Bank. The return is effective from the date of the notice or, if a later date is specified, the return is effective from that day and where a later date is specified in the notice, the credit institution may, by a new written notice to the Central Bank, set an earlier date of the return, which shall not be earlier than the date of its initial notification. The return of an authorization shall be irrevocable unless it is expressly stipulated that it will be effective at a later date and prior to that date the Central Bank, with written notice to the credit institution, accepts the revocation.
At least two (2) Executive Directors who effectively direct the business of the Credit Institution are required.
- The credit institution shall disclose the identity of the shareholders or members, whether direct or indirect, natural or legal persons who hold a qualifying holding and the percentage of such holding, or, in the absence of qualifying holdings, the identity of the twenty (20) largest shareholders or members. In determining whether the eligibility criteria are fulfilled, the voting rights provided for in Sections 28, 29 and 30 of the Transparency Requirements Law shall be taken into account, as well as the conditions for their aggregation provided in the Articles 34 and 35 of the said Law.
- The Central Bank shall be convinced of the suitability of shareholders or members, in particular when the criteria set out in Article 17A (1) are not fulfilled.
- Τhe existence of any close links between the Applicant and other natural or legal persons shall not block the effective exercise of the CBC’s supervisory mission.
- Laws, regulations or administrative provisions of a third country to which one or more natural or legal persons are subject, with which the credit institution has close links or difficulties with the application of those laws, regulations or administrative provisions, shall not block the effective performance of the CBC’s supervisory mission.
- The Credit institutions shall provide the Central Bank with the information it so requests in order to be able to monitor on a continuous basis the compliance with the conditions laid down in the Article 4 of the Law no. 66(I)/1997.
The application form must be submitted:
- by or on behalf of the Applicant to the Central Bank and
- shall be accompanied by:
- a plan of activities describing the types of the proposed banking activities and
- the organizational structure of the credit institution and
- any other documents and information that may be required by the Central
The Central Bank shall issue an authorization if:
- The members of the Management Body have a good reputation and sufficient knowledge, qualifications and experience to perform their duties;
- The overall composition of the management body reflects a sufficiently wide range of experiences, and
- The members of the Board of Directors meet the requirements set out in the Assessment of the Capacity and Eligibility of Board Members and Directors of Licensed Credit Institutions Directive of 2014.
The Central Bank does not consider applications for authorization on the basis of the market's financial needs.
The Central Bank shall consult the competent authority of another Member State before granting authorization when the applicant:
- is a subsidiary of a credit institution authorized in the other Member State; or
- is a subsidiary of the parent credit institution authorized in the other Member State; or
- is controlled by the same natural or legal persons who audit a credit institution authorized in the other Member State.
- When the Central Bank acts as the competent authority of a host Member State, it shall not require authorization or endowment for branches of credit institutions authorized in other Member States.
- Before granting authorization to a credit institution, the Central Bank shall seek the opinion of the competent authority of the Member State concerned which is responsible for the supervision of insurance companies or investment firms, where the credit institution;
- is a subsidiary of an insurance company or investment firm authorized in the Union, or
- is a subsidiary of the parent insurance company or investment firm authorized in the European Union; or
- is controlled by the same natural or legal persons who control an insurance company or investment firm authorized in the European Union.