Rules governing the taking-up of business

Rules governing the taking-up of financial business are indispensable for prudential supervision, given that they can help prevent the entry into the market of institutions that could jeopardise the stability of financial system.

Intervention by Banco de Portugal in the authorisation of credit institutions, financial companies and payment institutions is a major tool. Requirements for the taking-up of business may be broken down into three main groups, with different but interrelated goals:

• Suitability and professional qualifications of the members of the management and auditing boards and suitability of shareholders – it contributes to increasing the efficiency of the system as a whole and maintaining the confidence of depositors and other consumers of financial services;
• Feasibility of the programme of operations – it is related to profitability levels that guarantee the long-term solvency of the institution;
• Human, technical and financial resources that allow for an adequate management and control of risks underlying financial activities – they create a minimum basis for the protection of creditors and help prevent contagion effects and systemic risks.