Bank license in Europe – Lithuanian Specialised Bank
In January, 2017 European Union member state Lithuania introduced a new “light” banking license – Specialised Bank. Specialised Bank is allowed to provide almost all traditional banking services in European Union (EU) and European Economic Area (EEA) member-states: lending, payment services, receipt of deposits, currency exchange, issuing of e-money, issuing guarantees, fund administration, financial leasing, financial intermediation, creditworthiness assessment services, safe-deposit box rental.
The bank is restricted only in investment and pension fund management as well as other investment management or securities issue related services.
Lithuanian licensed Specialised Bank provides significant competitive advantage and opens up European financial market at significantly lower incorporation and operational costs. Lithuania and primarily its capital Vilnius already became a new hub for European financial service. Favourable regulatory and tax environment, excellent infrastructure, the fastest internet, cheap office space and quality pool of relatively cheap employees makes Vilnius attractive for large international banking institutions and for FinTech startups. UK giant Barclays Bank operates Barclays Technologies Centre Lithuania in Vilnius from 2009, offering IT and other services to Barclays businesses across the world. Scandinavian rivals SEB, Swedbank, Danske Bank as well as finance industry leaders Western Union, NASDAQ have shared service centers in Vilnius.
Traditional prestigious jurisdictions are losing their importance in our days. UK and London financial institutions are suffering from Brexit, discussions on Swiss “light” banking license is in incubation stage. UK startups like Revolut already discovered Lithuanian as a new hub to secure their European license. Offshore jurisdictions are no longer considered attractive because of automatic tax information exchange and limited access to single European market. Lithuania offers fully EU licensed financial institution now ready to provide banking services in 30 EU/EEA countries for 500 million wealthy consumers and 20 million businesses. With minimum equity capital of EUR 1 million and expected licensing time of 6 months, Lithuanian Specialised Bank currently has no equivalents within the rest of European jurisdictions.
Operational costs became vital in today’s financial services business. New Fintech companies challenging traditional banking business and cutting margins. Traditional banking institutions and Fintech startups are searching for jurisdictions opening large and wealthy European market at low cost. Lithuanian “light” banking license of Specialised Bank is exactly what they need. It opens single EU/EEA banking market, including large national markets such as French and German at significantly lower cost. A class office rent and employment costs are twice or even more cheaper in Vilnius comparing to traditional banking cities. Possibility to outsource relatively cheap and quality services from the local service providers gives strong competitive advantage and creates safe, efficient and cost effective banking institution ready to face intense competition in EU/EEA banking market.
The reasons why Lithuania is one of the top banking jurisdictions in EU/EEA:
- Fast licensing process. Issue of the license within period of 6 months.
- Equity capital of EUR 1 000 000.
- The documents can be submitted in English and amended “on the go” instead of formal writing forth and back.
- Direct access to Single Euro Payments Area (SEPA).
- Client deposits up to the amount of EUR 100 000 ensured according to EU regulations.
- Remote client verification. Innovative “know your customer” processes for remote client verification allows open the accounts without physical presence of the client.
- No sanctions for the first year. The Bank of Lithuania is committed to support startups and not to punish them during the first year of operation for minor infringements.
- Startup visa. Special visas for the citizens of non-EU/EEA countries running innovative businesses in Lithuania.
ECOVIS experience
ECOVIS International is a leading global consulting firm having over 4,500 professionals operating in over 65 countries. ECOVIS ProventusLaw is Lithuanian member firm of ECOVIS International. ECOVIS ProventusLaw has long experience consulting international clients and licensing finance institutions. Our experience starts from the incorporation of first modern NSEL 30 Index fund in Lithuania and fund’s management company 15 year ago. Recently we licensed European branch of California based e-payment company Alternative Payments, servicing over 100 000 websites around the world, global financial giant deVere Group getting e-money license in Lithuania, advised national post operator AB Lietuvos Paštas and leading mobile telecommunications service provider UAB Omnitel getting their payment institution licenses. Currently we service Fintech companies from European countries, US, Canada, China, Hong Kong, Israel, UAE, Singapore, Philippines, seeking license for European market.
That is why industry leader WireCard Bank AG recommends Lithuania and ECOVIS ProventusLaw as a gateway to European financial markets.
From our perspective, they fully handle all aspects of financial or corporate matters with a highly professional dedicated team. Their knowledge of the financial services industry within their local market is supporting us in our efforts across Europe. I would not hesitate in recommending ECOVIS ProventusLaw as a strong and reliable law firm for any dealings with the regulatory body in Lithuania and as a gate for the international financial services companies to Europe. Mr. Oliver Bellenhaus, WireCard Bank AG
More about licensing of finance institutions in Europe at www.ecovis.lt/fintech