Authorisation for setting-up: credit institutions
Applications for the setting-up of institutions having their head office in Portugal must be submitted to the Banco de Portugal.
However, the setting-up of credit institutions intending to become established in Portugal or in the other Member States participating in the Single Supervisory Mechanism (SSM) is subject to authorisation by the European Central Bank (ECB).
The authorisation procedure for the setting-up of credit institutions having their head office in Portugal thus implies an interaction between the ECB and the Banco de Portugal, particularly in the analysis of the setting-up project.
The authorisation for the setting-up of credit institutions having their head office in Portugal is subject to the provisions of the Legal Framework of Credit Institutions and Financial Companies (Regime Geral das Instituições de Crédito e Sociedades Financeiras – RGICSF), approved by Decree-Law No 298/92 of 31 December 1992, notably Title II – Authorisation of credit institutions having their head office in Portugal (Articles 14 to 35-A of the RGICSF).
What is a credit institution?
A credit institution is an undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account in accordance with Article 2-A(w) of the RGICSF.
This definition does not apply to:
- Investments firms referred to in Article 4(A) of the RGICSF;
- Financial companies referred to in Article 6 of the RGICSF;
- Holding companies subject to supervision by the Banco de Portugal, under Article 117 of the RGICSF;
- Payment institutions, under the Legal Framework for Payment Services and Electronic Money (Regime Jurídico dos Serviços de Pagamento e da Moeda Eletrónica – RJSPME), approved by Decree-Law No 91/2018 of 12 November 2018;
- Electronic money institutions, under the RJSPME;
- Investment fund management companies and credit securitisation fund management companies, whose prudential supervision is incumbent upon the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários – CMVM), under Decree-Law No 144/2019 of 23 September 2019.
Types of credit institutions
The RGICSF provides definitions of the following types of credit institutions:
Credit institutions may only carry out the operations permitted by the laws and regulations governing their activity (Article 4(1) and (2) of the RGICSF), namely as described in the table below.
|
Type of credit institution |
Activities |
Legal instrument |
|
Banks |
All banking operations listed in Article 4(1) of the RGICSF. |
|
|
Savings banks |
All banking operations listed in Article 4(1) of the RGICSF. |
|
|
Affiliated savings bank |
· taking deposits and other repayable funds;
· granting loans secured by lien or mortgage;
· acquiring and holding public debt securities of euro area Member States of the European Union;
· obtaining funding from other credit institutions;
· providing services of collection, cash transfer, safe deposit box rental, real estate management, regular payment and other similar services;
· conducting foreign exchange transactions. |
|
|
Central Mutual Agricultural Credit Bank |
· taking deposits and other repayable funds;
· financing mutual agricultural credit banks that are members of the Central Mutual Agricultural Credit Bank;
· lending;
· participating in bond issuance;
· issuing electronic money;
· providing transfer of funds, safe deposit box rental, custody, depositary and investment fund management services, in similar terms as banks;
· entering into agency agreements with mutual agricultural credit banks that are members of the Central Mutual Agricultural Credit Bank, provided that their activity is limited to their intervention area. |
|
|
Mutual agricultural credit bank |
· taking deposits and other repayable funds;
· engaging in agricultural credit operations in favour of members;
· providing safe deposit box rental and custody services;
· real estate management;
· insurance mediation;
· credit reference services;
· intermediation in payments and other similar activities;
· placement of securities provided that it does not imply a link to the subscription of any tranche not underwritten by the public;
· purchasing and selling foreign banknotes and coins or travellers’ cheques, as permitted to exchange offices;
· mutual agricultural credit banks that meet the appropriate structural conditions and adequate resources may be authorised by the Banco de Portugal to carry out other operations, such as:
i. financial leasing;
ii. factoring;
iii. issuing and managing means of payment, among which credit cards, travellers’ cheques and letters of credit;
iv. participation in securities’ issues and placement and provision of related services;
v. money broking;
vi. securities portfolios consulting services, safekeeping, management and administration;
vii. portfolio management and consulting services in relation to other assets. |
|
|
Credit financial institution |
Banking activities listed in Article 4(1) of the RGICSF, except for the taking of deposits. |
|
|
Mortgage credit institution |
· granting, acquisition and disposal of mortgage-backed claims on real estate, with a view to issuing covered bonds;
· granting, acquisition and disposal of claims on central or regional and local authorities of an EU Member State and claims carrying explicit and legally binding guarantee granted by the same entities, with a view to issuing public sector-backed bonds;
· in addition, mortgage credit institutions may also:
i. manage the assets received as repayment of the credits;
ii. carry on all the accessory activities necessary to pursue their purpose. |
Council Regulation (EC) No 1024/2013 of 15 October 2013 | Conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions. |
Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 | Establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (SSM Framework Regulation). |
Regulation (EU) 575/2013 of the European Parliament and of the Council of 26 June 2013 | Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. |
Regulatory technical standards on the information to be provided by the applicant entities to the competent authorities when applying for authorisation as credit institutions and implementing technical standards on templates to be used for the provision of such information. | |
EBA Guidelines on internal governance (EBA/GL/2017/11) | These specify the internal governance arrangements, processes and mechanisms that credit institutions and investment companies should apply under Article 74(1) of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013, in order to ensure effective and prudent management of the institution. |
These specify the internal governance arrangements, including sound risk management, which institutions, payment institutions and electronic money institutions should implement when they outsource functions, in particular with regard to the outsourcing of critical or important functions. | |
These specify, among others, the requirements regarding the suitability of members of the management body of credit institutions, investment firms, financial holding companies and mixed financial holding companies, and the notions of: · sufficient time commitment; · honesty, integrity and independence of mind of a member of the management body; · adequate knowledge, skills and experience of the management body; · adequate human and financial resources devoted to the induction and training of such members. | |
EBA Guidelines on sound remuneration policies (EBA/GL/2015/22) | These establish requirements on sound remuneration policies and practices applicable to all staff and disclosures on remuneration under Directive 2013/36/EU and Regulation (EU) No 575/2013. |
Legal Framework of Credit Institutions and Financial Companies | 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. |
It determines which information should accompany communications of acquisition of or increase in qualifying holdings in credit institutions and financial corporations. | |
It determines which elements the institutions must submit together with the authorisation request for the exercise of functions of the members of the management and supervisory bodies. | |
Executive Order No 95/94 of 9 February 1994 | It sets the minimum share capital of credit institutions and financial companies. |
Law No 83/2017 of 18 August 2017 | It sets forth anti-money laundering and counter terrorist financing measures. |
It governs conditions of application, procedures, instruments, mechanisms, enforcement measures, reporting obligations and other aspects necessary for ensuring compliance with obligations for the prevention of money laundering and terrorist financing, within the activities of financial entities subject to the Banco de Portugal’s supervision. | |
It establishes the procedures for submitting, maintaining and reviewing recovery plans, as well as the other rules necessary for the implementation of Article 116-D of the RGICSF. | |
Notice of the Banco de Portugal No 3/2020
| It regulates the internal control and governance systems and sets the minimum standards upon which the organisational culture of the entities subject to the Banco de Portugal’s supervision should be based. |
It regulates the reporting obligations relating to organisational conduct and culture and internal control and governance systems
|
Requirements for setting-up a credit institution
Upon the receipt of an application for authorisation to set up a credit institution, the Banco de Portugal and the ECB check whether the submitted proposal meets the requirements imposed by law.
These requirements are listed in Article 14 of the RGICSF, under which credit institutions having their head office in Portugal must meet the following conditions:
- correspond to one of the types of credit institutions provided for in Portuguese law;
- take the form of a public limited company (sociedade anónima), with the exception of mutual agricultural credit banks and affiliated savings banks (Article 29 of the RGICSF);
- have as their sole purpose the activities legally permitted by law;
- have an initial capital not lower than the legal minimum capital (Executive Order No 95/94 of 9 February 1994);
- have their head office and effective management in Portugal;
- have robust governance arrangements in place;
- have effective processes in place to identify, manage, monitor and report risks;
- have adequate internal control mechanisms in place;
- have remuneration policies and practices in place promoting and consistent with sound and prudent risk management;
- have management and supervisory bodies composed of members whose reputation, professional qualification, independence and availability, at an individual level or at the level of the bodies as a whole, provide guarantees of sound and prudent management.
Stages for authorising the setting-up of a financial company
Authorisation
1. Submission of the application and supporting information
The application for authorising the setting-up of a credit institution must be submitted to the Banco de Portugal, which must notify the ECB of its receipt. The application for authorisation must contain, in general, the following:
- elements listed in Article 17 of the RGICSF;
- complementary elements.
For this purpose, the Banco de Portugal makes a list available with all the information and elements necessary for a proper examination of the application for authorising the setting-up of credit institutions.
The application for authorisation, including all supporting information above, may be submitted in electronic or physical format.
- Electronic format: dsp.registos.expediente@bportugal.pt
- Physical format:
Banco de Portugal, Prudential Supervision Department, Authorisations Unit
R. Francisco Ribeiro, 2
1150-165 Lisbon
2. Assessment of the application
The Banco de Portugal checks the completeness of the information received for the analysis of the application procedure, assesses all information submitted and may request the applicant to provide any clarifications and additional elements which it considers appropriate to render a decision.
If the Banco de Portugal considers that the application does not contain all the necessary information and elements nor meet all domestic legal and regulatory authorisation requirements and conditions, it notifies the applicants and allows them reasonable time to render their opinion and, if applicable, remedy any identified inadequacy, before refusing to grant authorisation.
The ECB assesses the application for authorisation based on the authorisation conditions laid down in the applicable EU law. If it considers that these conditions are not met, the ECB offers the applicant the opportunity to comment in writing on the pertinent facts and objections relevant to the assessment.
3. Decision on authorisation
The Banco de Portugal may take one of the following decisions:
- Draft favourable decision
If the Banco de Portugal considers that the application complies with all the authorisation conditions laid down in the applicable national legislation, it draws up a draft decision in which it proposes that the ECB grant the applicant authorisation for access to the activity as a credit institution.
The draft decision is communicated to the ECB and the applicant. - Refusal of authorisation
The Banco de Portugal refuses to grant authorisation where the application does not meet all the authorisation conditions laid down in the applicable national legislation, notably in the situations under Article 20(1) of the RGICSF, and sends a copy of its decision to the ECB.
Following a favourable assessment by the Banco de Portugal, the ECB may adopt one of the following decisions:
- Granting of authorisation
The ECB adopts a decision granting authorisation if the applicant meets the authorisation conditions in accordance with European Union law and the applicable national law.
If the ECB does not make a decision on the draft decision of the Banco de Portugal within ten business days, the draft decision is deemed to be adopted by the ECB. This period may be extended once, for the same period, in duly justified cases. - Refusal of authorisation
The ECB may object to the draft authorisation decision submitted by the Banco de Portugal only if the authorisation conditions laid down in the applicable EU legislation are not met.
The ECB indicates in writing the reasons for the refusal.
The applicant must be notified of the final decision on the procedure within six months of the receipt of a complete application or of the additional information requested, but in any case within twelve months from the receipt of the initial application. Non-notification of the decision within the above-mentioned periods shall imply a presumption of tacit refusal of the application.
The decision to grant the authorisation allows the applicant to set up a credit institution. However, for the institution’s commencement of activity, the applicant is required to request the institution’s special registration with the Banco de Portugal.
The authorisation granted does not require the applicant to set up a credit institution. Nevertheless, the authorisation lapses if the institution fails to commence its activity within a period of twelve months following the authorisation. Upon request of the applicants, the time limit laid down for the commencement of activity may be extended for another period of twelve months.
Special registration with the Banco de Portugal
4. Prior and on-site verification of compliance with the legal and operational requirements for the commencement of activity
After the setting-up of the credit institution is authorised by the ECB, and after the company is effectively set up, the parties concerned must request the Banco de Portugal to proceed with the institution’s special registration for the purposes of Article 65(1) of the RGICSF.
Upon such request, the Banco de Portugal carries out a prior inspection at the credit institution’s premises, in order to check whether all conditions for authorisation necessary for the setting-up of the credit institution or for the pursuit of the activity are met.
5. Decision on registration
Following the on-site verification of legal and operational requirements for the commencement of activity, the Banco de Portugal adopts one of the following decisions:
- Special registration of the institution, after checking whether the conditions for the pursuit of activity are met. The special registration of the credit institution covers the items listed in Article 66 of the RGICSF. The credit institution may commence its activity once its registration is completed.
- Refusal to proceed with the institution’s special registration, particularly when any of the authorisation requirements necessary for the setting-up of the credit institution or the pursuit of activity is not met, in accordance with Article 72 of the RGICSF.
Clarifications
The Banco de Portugal is prepared to clarify any specific question regarding projects to set up credit institutions submitted to the Banco de Portugal in advance. Questions can be sent by email to (dsp.registos.expediente@bportugal.pt) or by post to:
Banco de Portugal, Prudential Supervision Department, Authorisations Unit
R. Francisco Ribeiro, 2
1150-165 Lisbon
All questions submitted to the Banco de Portugal must be presented with a highly specific factual basis and be well-reasoned, in order to allow for an adequate analysis.
FAQs
I intend to create a company with the aim of granting credit. Do I need to get an authorisation for this? If so, what kind of company will I have to set up?
You should submit the intended project to the Banco de Portugal, with a high degree of detail, particularly with regard to the identification and delimitation of the activity to be carried out and the intended business model. This information is essential for a correct legal framing of your situation and therefore of the conditions which may be required for the setting-up of the company and whether it is placed under the supervision of the Banco de Portugal.
In this particular case, credit granting on own account, as provided for in Article 4(1)(b) of the RGICSF, and the activities of credit intermediation and the provision of consultancy services regarding credit agreements, as provided for in Article 4 of the legal framework for credit intermediaries, approved by Decree-Law No 81-C/2017 of 7 July 2017, are exclusive of entities authorised to exercise such activities, in accordance with the provisions of Article 10 and Articles 5 and 7 of those legal instruments respectively.
Where can I find a form with the information to be sent to the Banco de Portugal for applying for authorisation to set up a credit institution?
The list of the information and elements necessary for a proper examination of the authorisation procedures for the setting-up of credit institutions can be found here.
Although the Banco de Portugal does not provide a form for such purpose, the form attached to the implementing technical standards of the European Banking Authority (EBA) may be used as a reference. These standards lay down the templates to be used for the provision of the necessary information in the context of authorisation applications by credit institutions (EBA/RTS/2017/08 and EBA/ITS/2017/05).
May the application for authorisation refer to an already incorporated commercial company?
Yes, the application for authorisation may refer to an already incorporated commercial company.
However, in these cases, the commercial company may not carry out any activities pertaining to credit institutions, nor include in its company or business name any expressions suggesting such activity, until the authorisation and registration procedure with the Banco de Portugal is successfully completed.
Under Article 11 of the RGICSF, only undertakings authorised as credit institutions may include in their company or business name or use in their activity expressions which suggest an activity pertaining to credit institutions.
Is obtaining funding through the issue of debt securities deemed to be receiving other repayable funds from the public for the purposes of the principle of exclusivity enshrined in the RGICSF?
Under Article 8(1) of the RGICSF, only credit institutions may take deposits or other repayable funds from the public for their own account. Funds raised through the issuance of bonds or commercial paper, under the provisions and within the limits of the Portuguese Company Law or other applicable law, are not considered repayable funds received from the public for these purposes (as referred to in Article 9(1) of the RGICSF).
Is a criminal record certificate issued more than a year ago deemed valid for the purposes of the application for authorisation?
Criminal record certificates are deemed valid if they contain their validity period and this has not lapsed. In particular, the validity period of Portuguese criminal records is three months from the date of issue; thus, a certificate issued more than a year ago would not be valid for this purpose.
What should I do in case of changes to the information initially sent to the Banco de Portugal during the authorisation application procedure?
If, during the authorisation procedure, there is any change to the information included in the initial application or in the elements provided in the meantime (supervening fact), such change must be communicated to the Banco de Portugal as soon as possible and by means made available for this purpose, accompanied by all necessary supporting elements.
Does the Banco de Portugal charge any fee as part of the credit institution authorisation and registration or supervision procedure?
No, the Banco Portugal does not charge any fee as part of these activities. However, the ECB charges a supervisory fee under Regulation (EU) No 1163/2014 of 22 October 2014.
In which languages can the application for authorisation be submitted?
In Portuguese or 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 these are not drawn up in Portuguese or English, they must also be accompanied by a certified translation in accordance with the Hague Convention or duly legalised.
Translations of documents must be certified and accompanied by information on the translation entity certifying their suitability.
May the Banco de Portugal make the information contained in the authorisation procedure publicly available?
No, the Banco de Portugal is subject to the duty of professional secrecy under Article 80 of the RGICSF.
I intend to set up a company to manage crowdfunding platforms. Is it necessary to apply for authorisation in order to commence this activity?
If you intend to create a crowdfunding platform management company, you must obtain authorisation from the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários – CMVM). The CMVM is responsible for the supervision of these entities.
