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.
Process of obtaining 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. 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. 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 Information and documents regarding founders/shareholders Information and documents regarding officials 1) Section 24 and 25 of Credit Institution Law 2) Provisions of Latvijas Banka Regulation No 342 "Regulation on the Documents to Be Submitted for the Fit and Proper Assessment of Credit Institution and Investment Firm Officials" of 25 November 2024 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 Latvijas Banka Regulation No 343 "Regulation on the Assessment of the Suitability of Credit Institution and Investment Firm Officials" of 25 November 2024 4) Provisions of Latvijas Banka Regulation No 371 "Regulation on Credit Institutions Management System" of 16 December 2024 Information on business plan: The contents of a business plan is described in Provisions of Commission 17.06.2022 delegated regulation (EU) 2022/2580 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the information to be provided in the application for the authorisation as a credit institution, and specifying the obstacles which may prevent the effective exercise of supervisory functions of competent authorities. Outlines of base procedures and policies to be submitted: The amount of documents to be submitted and information to be prepared depends on the financial services envisaged in the business plan that the credit institution plans to offer to its clients, but the basic documents are as follows, for which only outlines need to be provided during the licensing process. However, when the credit institution starts its operations, they must already be prepared and approved by the credit institution in order to be able to provide services to clients. Outline of the risk management framework, Outline of the liquidity risk management policy, Outline of the funding concentration and diversification policy, Outline of the collateral management policy, Outline of the deposit policy, Outline of the credit and lending policy, Outline of the concentration risk policy, Outline of the provisioning policy, Outline of the dividend distribution policy, Outline of the trading book policy, Description of the applicant credit institution’s process for developing a recovery plan, Outline of the whistleblowing policy, Outline of the conflicts of interest policy, Outline of the complaints handling policy, Outline of the market abuse policy, Outline of the policy promoting diversity in the management body, Outline of the remuneration policy for staff members whose professional activities have a material impact on the applicant credit institution’s risk profile, Outline of the systems and policies for assessing and managing the risks of money laundering and terrorist financing, including an overview of the key procedures that have been put in place to counter the risk that the applicant credit institution might be used to further financial crime, Outline of the internal audit policy, Outline of the product governance policy, Outline of the consumer protection policy, Outline of the business continuity plan and policy, including an overview of available back-up and recovery systems and of plans ensuring the availability of key staff in business continuity situations, Description of the applicant credit institution’s IT infrastructure, including the systems in use or to be used, its hosting arrangements, the organisation of its IT function, IT structure, IT strategy and IT governance, IT security policies and procedures, and any systems and controls in place or to be put in place for the provision of online banking facilities. Other recommendations: To prepare the documents in good quality Latvijas Banka recommends reviewing also: The review of application is free of charge. 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. 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. 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. 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.What does the entrepreneur do?
What does Latvijas Banka do?
Taken into account
Documents to be submitted
Costs
What does the entrepreneur do?
What does Latvijas Banka do?
What should be taken into account?
List of documents to be submitted
Costs
Time limit for examining the application
What does the entrepreneur do?
What does Latvijas Banka do?
What should be taken into account?
Costs
What does the entrepreneur do?
What does Latvijas Banka do?
What should be taken into account?
Costs
What does the credit institution do?
What does Latvijas Banka do?
What should be taken into account?
Costs
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: