Shearman & Sterling LLP | Financial Regulatory Developments Focus | European Central Bank Issues Final Guides on Licensing Credit Institutions and FinTech Credit Institutions
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  • European Central Bank Issues Final Guides on Licensing Credit Institutions and FinTech Credit Institutions
    03/23/2018

    The European Central Bank has published finalized versions of its guides “Guide to Assessments of Licence Applications” and “Guide to Assessments of FinTech Credit Institution Licence Applications”, following consideration of the responses to consultations on draft versions of the guides, which the ECB ran between September and November 2017.

    The ECB has been exclusively competent, since November 2013, to authorize all Eurozone credit institutions and credit institutions established in any other EU Member States that participate in the Single Supervisory Mechanism via close cooperation arrangements. The ECB exercises its competence in close cooperation with the relevant national regulators. The ECB has developed the Guides, which are not legally binding, to promote awareness and enhance the transparency of the assessment criteria and processes for establishing a credit institution within the SSM. These should serve as practical tools to support applicants and all other entities involved in the process of bank authorization to ensure a smooth and effective procedure and assessment.

    The Guide to Assessments of Licence Applications applies to all license applications to become a credit institution within the meaning of the Capital Requirements Regulation. Its coverage includes initial authorizations for credit institutions, applications from FinTech companies, authorizations in the context of mergers or acquisitions, bridge bank applications and license extensions. The Guide outlines general licensing principles, the scope of the licensing requirement and how licenses are assessed. It also sets out procedural considerations such as due process and the timescales for licensing and considers the circumstances in which a license may be withdrawn or may lapse.

    The Guide to Assessments of FinTech Credit Institution Licence Applications outlines the ECB’s approach to the assessment of license applications for new FinTech banks and for the establishment of specialized subsidiaries of existing credit institutions with FinTech business models. For the purposes of the Guide, the ECB considers “FinTech banks” to be banks with business models in which the production and delivery of banking products and services are based on technology-enabled innovation. The Guide to Assessments of FinTech Credit Institution Licence Applications should be read in conjunction with the Guide to Assessments of Licence Applications as well as the ECB’s guide to fit and proper assessments published in May 2017.

    The Guides will be updated regularly to reflect new developments and experience gained in practice.

    View the Guide to Assessments of Licence Applications.

    View the Guide to Assessments of FinTech Credit Institution Licence Applications.

    View the Guide to Fit and Proper Assessments.