A banking license fundamentally serves as a seal of approval, as the banking licence certifies that a financial company complies with rigorous government regulations, ensuring adherence to regulatory requirements, customer protection, and oversight by regulatory bodies. More than just a legal requirement, it is a prerequisite for a company to be recognized as a bank, establishing trust and security in financial transactions.
Obtaining a bank license involves initiating a review with the national supervisory authority, complying with legal obligations, and demonstrating the bank's operational competence. The European Central Bank (ECB) evaluates applications based on four primary criteria, and large investment firms must also secure a banking license. It usually takes six to twelve months for the application decision to be made. The process can vary based on individual circumstances..
Acquiring a banking license requires a financial institution to meet stringent criteria, including:
- Maintaining minimum capital requirements
- Having a certain number of directors
- Ensuring the spread and residence of shareholders
- Revealing beneficial shareholders
- Maintaining financial reserves
- Ensuring the security of their data systems