Authorisations

The ECB grants and withdraws banking licences for all banks in the euro area and assesses the acquisition of holdings.

List of supervised banks

The ECB also takes “fit and proper” decisions – it assesses the suitability of new members of the significant banks’ management bodies.

National supervisors, i.e. the national competent authorities (NCAs), serve as entry points for applications and notifications related to all authorisation procedures. The banks should use the national forms for application or notification where available.

List of national application forms

Common procedures

These are the procedures which apply to both significant and less significant institutions. They also apply to subsidiaries of non-euro area banks within the euro area.

The common procedures enable the ECB to apply the single European rulebook and ensure consistency in terms of how Member States transpose EU rules into national law.

Common procedures include:

  • Granting a banking licence to a new company or extending an initial licence
  • Authorising an acquisition of a participation in an existing institution
  • Withdrawing a banking licence

Licensing

Licensing consists of granting a banking licence to a new company, or an existing institution in the case of extending the initial licence.

Criteria

The criteria assessed by the ECB include, but are not limited to, the following:

  • programme of operations
  • governance (fit and proper members of management bodies, suitable shareholders)
  • capital, liquidity and solvency
  • internal organisation (risk management, compliance, audit)

Timeframe

It usually takes six months from the applicant providing a complete application for a decision to be taken regarding a licence application. In any event, a decision must be taken within 12 months of the date of the application.

Process

Acquisition of qualifying holdings

The ECB must authorise the acquisition of a participation in an existing institution if this participation counts as a “qualifying holding”, in others words if the acquirer reaches one of the relevant thresholds of 10, 20, 30 or 50%.

Supervision. Explained.: What is a qualifying holding?

Criteria

The criteria assessed by the ECB are the following:

  • reputation of the proposed acquirer
  • fitness and propriety of the board members to be appointed by the proposed acquirer
  • financial soundness of the proposed acquirer
  • ability of the target to continue to comply with prudential requirements following the acquisition
  • whether the transaction involves, or increases the risk of, money laundering or the financing of terrorism

Timeframe

A qualifying holding must be authorised or objected to within 60 working days, with a maximum extension to 90 working days.

Process

Withdrawal of authorisations

Both the ECB and the relevant national supervisor have the right to initiate the withdrawal of a banking licence in certain circumstances. A licence will be withdrawn if a credit institution ceases its activities or no longer meets the applicable prudential requirements.

Timeframe

The timing depends on the circumstances of the case, for instance whether a winding down of activities is required or whether the credit institution has ceased its activities.

Process

Withdrawal initiated by the ECB

Withdrawal initiated by the national supervisor / bank

A change in supervisory status can mean a change in the amount of the annual supervisory fees to be paid to the ECB.

Change in situation
Supervisory fees

“Fit and proper” assessment

The ECB only takes fit and proper decisions for significant banks. When assessing the fitness and propriety of the members of a management body, it applies the relevant national and EU law.

Fit and Proper Questionnaire

The management body of a credit institution must be suitable to carry out its responsibilities and be composed in a manner that contributes to effective management and balanced decision-making.

Ensuring that institutions’ management bodies are “fit and proper” not only enhances the safety and soundness of the institution concerned, it also strengthens the banking sector as a whole by increasing public trust in the people managing the euro area’s financial sector.

Supervision. Explained.: What is fit and proper supervision?

Criteria

The ECB considers five criteria within the fit and proper assessment:

  • Reputation
  • Experience
  • Conflicts of interest and independence of mind
  • Time commitment to duly perform the functions
  • Collective suitability of the board

When appointments are part of a licensing or qualifying holding procedure, the fit and proper assessment forms part of the assessment for granting the licence or for the acquisition of the qualifying holding.

Timeframe

National legal deadlines are applied.

Process