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The Bank - Column 1
Acquisition or increase of a qualifying holding: Payment Institution
Related links
1. Communication to the Banco de Portugal
“Qualifying holding” means a direct or indirect holding in an undertaking, which represents 10% or more of the capital or of the voting rights or which, for whatever reason, makes it possible for its holder to exercise a significant influence over the management of that undertaking, as defined in Article 4(1)(36) of Regulation (EU) No 575/2013 of the European Parliament and of the Council, to which Article 38(1) of the Legal Framework for Payment Services and Electronic Money (Regime Jurídico dos Serviços de Pagamento e da Moeda Eletrónica – RJSPME).
Thus, any natural or legal person who comes to own, directly or indirectly, a qualifying holding in a payment institution must inform the Banco de Portugal of such intention in advance (Article 38(1) of the RJSPME).
Any natural or legal person must also communicate to the Banco de Portugal its proposal to increase, directly or indirectly, a qualifying holding as a result of which its percentage reaches or exceeds 10%, 20%, 30% or 50% of the capital or of the voting rights held in the institution or when the latter becomes a subsidiary of the acquiring entity.
In cases of involuntary acquisitions, proposed acquisitions must be communicated to the Banco de Portugal in accordance with Article 38(1) of the RJSPME as soon as the proposed acquirer becomes aware of them.
In general terms, the stages of the procedure are as follows:
1. submission of a notification regarding the intention to acquire or increase a holding to the Banco de Portugal, accompanied by the required elements provided for in Notice of the Banco de Portugal No 6/2021;
2. assessment of the proposed acquisition or increase of a qualifying holding by the Banco de Portugal;
3. request for information and clarification elements necessary for a thorough examination of the process by the Banco de Portugal;
4. decision to oppose or not oppose the acquisition or increase of a qualifying holding by the Banco de Portugal;
5. notification of the decision of the Banco de Portugal to the proposed acquirer.
The Banco de Portugal may determine the suspension of the voting rights attached to a qualifying holding, to the extent necessary and appropriate to prevent the influence over the management which has been obtained through the act resulting in the acquisition or increase of the said holding where the person concerned: (i) has failed to comply with the duty of communication to the Banco de Portugal, or (ii) has acquired or increased a qualifying holding after providing the relevant communication, but before the competent authority has issued its decision to oppose or not oppose, or also (iii) has acquired or increased a qualifying holding in case of a decision by the competent authority to oppose the proposal (Article 105(1) of the Legal Framework of Credit Institutions and Financial Companies, applicable to the payment institutions by reference under Article 39(6) of the RJSPME).
Type of legal act: Decision to oppose or not oppose.
Competent authority: Banco de Portugal.
| Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 | On the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC. |
| Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 | On payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC. |
| Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector (JC/GL/2016/01) | These guidelines clarify the procedural rules and criteria to be applied by the competent authorities for the prudential assessment of acquisitions and increases of qualifying holdings in financial sector entities. |
| Legal Framework for Payment Services and Electronic Money (RJSPME) | It regulates the taking up of the business of payment institutions and the provision of payment services, as well as the taking up of the business of electronic money institutions and the provision of electronic money issuance services. (Articles 38 and 39) |
| Legal Framework of Credit Institutions and Financial Companies (RGICSF) | It regulates access to and pursuit of activity by financial companies and the exercise of their supervision, as well as the supervisory powers and tools. (Articles 102-A; 103(1) and (2); 105 and 106, applicable by reference under the RJSPME) |
| Notice of the Banco de Portugal No 6/2021 of 2 November | It governs the information and elements required to be communicated to the Banco de Portugal in the procedures for the acquisition, increase or reduction of qualifying holdings. |
3. Application procedure
The communication of the proposed acquisition or increase of a qualifying holding must be accompanied by the elements and information provided for in Notice of the Banco de Portugal No 6/2021 (Notice).
For the purposes of a thorough examination of the procedure for increasing or acquiring a qualifying holding in a payment institution, the proposed acquirer must consider the following information, among other elements:
- in addition to the proposed direct acquirer, the proposed indirect acquirers, including all intermediate participants, and the beneficial owner of the holding, are required to notify the acquisition or increase of a qualifying holding, pursuant to Article 38(1) of the RJSPME, if the proposed acquisition or increase of a qualifying holding to be notified involves the indirect acquisition of qualifying holdings (Article 1(3) of the Notice). The Banco de Portugal applies the calculation methodology for indirect qualifying holdings described in point 6 of the Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector (JC/GL/2016/01)
- the proposed acquirer must inform the Banco de Portugal of the identity of the payee or ultimate beneficial ()owners, as defined in Article 2(1)(h) of Law No 83/2017 of 18 August, of the qualifying holding in question, as well as any subsequent changes to that holding;
- the declaration(s) drawn up in accordance with the template set out in Annex III to the Notice, must be issued by all those required to make a prior notification as described above, which must be signed in accordance with the terms set in Article 2(2) of the Notice;
- the individual declarations, drawn up in accordance with the template set out in Annex IV to the Notice, must be signed by any person who is the subject of personal data provided under the relevant procedure (Article 2(3) of the Notice);
- where, as a result of the proposed acquisition, the proposed acquirer intends to appoint new members to the management bodies of the institution in which the acquisition is proposed, it must identify such members and submit the relevant documents referred to in Article 2 of Instruction of the Banco de Portugal No 23/2018 (Instruction No 23/2018). The questionnaires referred to in Article 2(1)(a) of Instruction No 23/2018 must be signed by the applicant and the proposed acquirer, and the assessment reports referred to in paragraphs 1(c) and 2(a) of that Article must be prepared and signed by the proposed acquirer (Article 2(5) and (6) of the Notice);
- the proposed acquisition or increase of a qualifying holding of up to 50% of the share capital or voting rights of the institution in which the acquisition is proposed must be accompanied by a document containing strategic guidelines, in accordance with Article 3(1) of the Notice;
- the proposed acquisition or increase of a qualifying holding resulting in a change in control or establishment of a control relationship, as defined in Article 2-A(1)(mm) of the RGICSF, with the institution in which the acquisition is proposed, must be accompanied by a business plan containing the information referred to in Section II of Annex II to the Notice (Article 3(2) of the Notice);
- the proposed acquirer must submit the elements identified in the Notice together with supporting documents enabling the Banco de Portugal to conclude on the fulfilment of the criteria laid down in Article 103(2) of the RGICSF and Article 23 of Directive 2013/36/EU and in the Notice.
The Banco de Portugal may also, at any time, request additional elements and information from the proposed acquirer and make the inquiries deemed necessary (Article 2(4) of the Notice and Article 39(2) of the RJSPME).
Exemption from submission of elements
The Banco de Portugal may waive the need for submission of the information and elements provided for in the Notice on a case-by-case basis either on its own initiative or upon a duly substantiated request, in particular in one of the following cases (Article 8(1) of the Notice):
- the Banco de Portugal is already aware of the elements and information to accompany the procedure and they are duly up to date;
- the proposed acquirer and the members of its management body are already supervised or authorised by a financial sector supervisory authority of a European Union Member State and there are no subsequent facts that might affect compliance with the requirements for authorisation.
The request for exemption under point 1 above must always be accompanied by a declaration signed by a person with powers to represent the party required to submit the elements and information in question, confirming that the elements and information in the possession of the Banco de Portugal remain up to date (Article 8(2), of the Notice).
The request for exemption under point 2 above must always be accompanied by a declaration signed by a person who has the power to represent the party required to submit the elements and information in question, confirming that there are no subsequent facts to the authorisation that might affect compliance with its requirements (Article 8(3) of the Notice).
The declarations provided for in Annexes III and IV of the Notice must also be sent to the Banco de Portugal (Article 8(4) of the Notice).
4. Assessment
The Banco de Portugal assesses whether the proposed acquisition or increase of a qualifying holding complies with all the conditions laid down in the applicable law.
Specifically, the Banco de Portugal assesses whether the proposed acquirer meets the conditions to ensure the sound and prudent management of the institution in which the acquisition is proposed, considering the suitability of the proposed acquirer, their likely influence on the credit institution and the financial soundness of the proposed acquirer, against five criteria.
Criteria
(Article 103(2) RGICSF, applicable by reference under Article 39(1) of the RJSPME)
- The suitability of the proposed acquirer, taking into account the provisions of Article 30-D of the RGICSF, in the case of a natural person.
- The reputation, professional qualification, independence, and availability of the members of the management body of the payment institution, to be appointed as a result of the proposed acquisition, as prescribed in Articles 30 to 33-A of the RGICSF.
- The financial soundness of the proposed acquirer, in particular in relation to the type of business pursued or envisaged in the payment institution.
- Whether the payment institution will be able to comply and continue to comply with the applicable prudential requirements and, if it belongs to a group, whether the group has a structure that makes it possible to exercise effective supervision, effectively exchange information with the competent authorities and determine the allocation of responsibilities among the competent authorities.
- Whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering or terrorist financing, as defined in Article 1 of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May, is being or has been committed or attempted, or where the proposed acquisition could increase the risk thereof.
Cooperation between competent authorities
For the purposes of assessing the proposed acquisition or increase of a qualifying holding, and within the framework of cooperation between the competent authorities, the Banco de Portugal carries out a series of steps, including consulting various databases and requesting an opinion of:
- the competent authorities of the home country;
- the Portuguese Insurance and Pension Funds Supervisory Authority (Autoridade de Supervisão de Seguros e Fundos de Pensões – ASF);
- the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários – CMVM).
Procedures and deadlines
Sending of the communication
Communication of the proposed acquisition or increase of a qualifying holding must be sent to the Banco de Portugal at Prudential Supervision Department – Authorisations Unit, Rua Castilho, 24, 1250-069 Lisbon. If the communication is delivered by hand to that address, it must be delivered during working hours (8:30-16:30).
Alternatively, the proposed acquirer may send the communication by email to [email protected].
If the proposed acquirer is a supervised institution, it must submit its application via the specific online authorisation and registration platform of the Banco de Portugal.
In cases where the documentation is sent to the Banco de Portugal by electronic means, it can, where possible, be delivered as a searchable PDF document.
Upon receipt of the communication:
- if the communication is duly accompanied by all the elements and information required, the Banco de Portugal informs the proposed acquirer in writing of the legal date of expiry of the period for the decision;
- if the communication is not duly accompanied by all the elements and information required, the Banco de Portugal informs the proposed acquirer in writing of the missing elements or information.
Assessment of the communication
After the completion of the application by the proposed acquirer with all the required information and elements, the Banco de Portugal informs the proposed acquirer of its decision within 60 working days of the receipt of the communication provided for in Article 39(1) and (2) of the RJSPME or of the date of the reply to the request for additional information, but no later than 120 working days from the submission of the initial request (Article 39(3) of the RJSPME).
The request for additional data or information made in writing by the Banco de Portugal interrupts the assessment period, for the period between the date of the request for information and the receipt of a response by the proposed acquirer (Article 39(4) of the RJSPME).
5. Decision
The Banco de Portugal decides to oppose or not oppose the acquisition or increase of a qualifying holding based on its assessment of the submitted application, in accordance with the requirements laid down in the applicable legislation.
The Banco de Portugal informs the proposed acquirer of its decision within 60 working days of receipt of the communication provided for in Article 39(1) and (2) of the RJSPME or of the date of the reply to the request for additional information, but no later than 120 working days from the submission of the initial request (Article 39(3) of the RJSPME).
Before adopting a decision which may adversely affect the rights of the proposed acquirer (decision to object or not object subject to conditions or obligations), the Banco de Portugal grants the proposed acquirer the right to be heard in accordance with Article 121 of the Portuguese Code of Administrative Procedure.
Opposition
The Banco de Portugal may oppose the proposed acquisition or increase of a qualifying holding only in the following situations:
- it deems that it has not been demonstrated that the proposed acquirer fulfils the conditions to ensure the sound and prudent management of the payment institution, based on the criteria above-mentioned;
- the proposed acquirer has provided incomplete information.
If the Banco de Portugal decides to oppose, it:
- informs the proposed acquirer, in writing, of the decision and the reasons therefor, within two business days of that decision and prior to the expiry of the legal deadline for the decision;
- may make the decision and the reasons therefor accessible to the public, on its own initiative or upon request of the proposed acquirer.
Non-opposition
If the Banco de Portugal decides not to oppose, it notifies the proposed acquirer of its decision and may set a time limit for the proposed acquisition.
After completing the proposed acquisition or increase of a qualifying holding, the acquirer has 15 (continuous) days to communicate such occurrence this to the Banco de Portugal (Article 38(3) of the RJSPME). The referred communication must be accompanied at least by the following information (Article 6 of the Notice):
(a) acquirer’s identification;
(b) seller’s identification;
(c) percentage of share capital and voting rights acquired;
(d) effective date of the acquisition or increase of a qualifying holding;
(e) supporting documentation, attesting the documents by which the proposed acquisitions or increases of a qualifying holding materialises.
6. Clarifications
The Banco de Portugal is prepared to clarify any specific question on any proposed acquisitions or increases of a qualifying holding submitted to the Banco de Portugal in advance. Questions can be sent by email (to [email protected]) or by post to:
Banco de Portugal, Prudential Supervision Department, Authorisations Unit
Rua Castilho, 24
1250-069 Lisbon
All questions submitted to the Banco de Portugal must be presented with a highly specific factual basis and be well-reasoned, to allow an adequate analysis.
7. FAQs
Does the Banco de Portugal charge any fee for the analysis of a proposed acquisition or increase of a qualifying holding?
No, the Banco Portugal does not charge any fee for these processes.
In which languages can the communications be submitted to the Banco de Portugal?
The communications sent to the Banco de Portugal can be submitted in Portuguese or in English.
Official documents (e.g., criminal record certificates) which are not issued by Portuguese authorities must be certified under the Hague Convention or duly legalised.
If the documents accompanying the process are not drawn up in Portuguese or in English, they must be accompanied by a certified translation and stamped with an apostille in accordance with the Hague Convention or duly legalised. Upon request of the Banco de Portugal, these translations must be accompanied by information certifying the suitability of the translating entity.
May the Banco de Portugal publicly disclose the information contained in the process?
No, the Banco de Portugal is subject to the duty of professional secrecy under Article 80 of the RGICSF, by reference under Article 10 of the RJSPME.