Incorporation of a bank in EU

Banknotes and Coins Beside Gray Safety Box

Incorporation of a bank may seem to be rather far and unreachable goal, but in fact this destination is not so much different from incorporation of any other legal entity. Surely, due to the involvement of other people savings and possible crucial effect on a country's overall economy, it is important that banks are subjected to stricter regulations and frequent audits.

European Commission and European Central Bank work together in order to strengthen the Economic and Monetary Union. One of the tools developed to navigate towards the above mission is a Single Supervisory Mechanism which grants an authority for ECB to conduct supervisory reviews and inspections, ensure compliance with EU rules, set higher capital requirements as well as grant or withdraw banking licences. Nevertheless, each EU member state can have slightly different procedures and requirements regarding incorporation of banks.

Incorporation of a bank in Latvia

As a member state of EU, Latvia is also part of the Single Supervisory Mechanism which grants an authority to ECB for various supervisory actions, including granting and withdrawing banking licences. In order for a bank to receive an operating licence in Latvia, it needs to submit a number of documents and other information according to the Credit Institution Law and Regulations on the Issue of Credit Institution and Credit Union Operating Licences. The documents need to be submitted to the Financial and Capital Market Commission. After all documents are submitted, the Commission examines the application for the banking licence and within three months proposes a draft decision to ECB, based on which ECB grants or denies a banking licence. A minimum starting capital for a bank in Latvia is set to be 5 million EUR.

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