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Lithuania: growing interest in a specialized bank license

Lithuania: growing interest in a specialized bank license

From the 1st of January 2017, an increased number of existing and new financial sector market’s participants are becoming interested in establishing a specialized bank in Lithuania. Specialized bank feature requirement – to have 1 million EUR capital instead of 5 million EUR – has already caught the eye of at least a dozen of potential service providers. It is believed that this interest will increase the competition in the market.

Chairman of the Board of the Bank of Lithuania Mr. Vitas Vasiliauskas emphasized an increased interest from the foreign investors in bank licensing while reviewing the banking sector results of 2016, ongoing issues in the payment service market and other innovations. He assured that in addition to the growing interest in specialized banking license there is also an interest in a normal bank license.

“The biggest attraction aspect is associated with Lithuania’s Euro zone membership, our active efforts in payment market and regulators as a partner’s image”, – said to the media V. Vasiliauskas.

Attorney at law of ECOVIS ProventusLaw – law firm specializing in financial law and providing legal advice for various financial and payment institutions – Inga Karulaitytė-Kvainauskienė states that the interest in obtaining a specialized bank license in Lithuania is seen not just from national but from abroad investors as well.

“A positive and flexible regulator, the attractiveness of the Lithuanian legal and technological environment is favorable for the new financial market participants that are planning to come to our country.  We feel that interest – from China to the United States,” – said I. Karulautytė-Kvainauskienė.

Summarizing the banking sector in 2016, the Bank of Lithuania notes that the banking market may be continued to be supplemented by niche market’s participants that offer payments or consumer lending services with a strong focus on their customers. This – electronic money institutions, payment institutions there is also an increased interest in establishing peer to peer lending platforms. This was significantly influenced by the Law on Crowdfunding adopted last year in Lithuania.

The possibility to set up a specialized bank in Lithuania emerged after the adoption of amendments of the Banking Law, which allows to establish a bank with a lower initial capital requirement (1 million EUR Instead of 5 million EUR), but the bank will not be able to provide investment services. In all other respects, such as institution after receiving a banking license does not differ from the existing banks and same supervisory requirements are mandatory to them. The latter would be applied on a pro rata basis in accordance with the institution’s complexity.

“A positive and flexible regulator, the attractiveness of the Lithuanian legal and technological environment is favorable for the new financial market participants that are planning to come to our country.  We feel that interest – from China to the United States,” – said I. Karulautytė-Kvainauskienė.

Lithuania is already regarded as one of the top countries in European Union for FinTech companies. Application for a license can be submitted here without establishing a company, there are no particular requirements for senior management, the Bank of Lithuania reviews applications and issues a licenses for Payment or E-money institutions within the period of 3 months or even faster. Moreover, the Bank of Lithuania is also committed not to punish newly established Payment or E-money institutions during the first year of supervision for minor infringements and all documents can be submitted in English.

More information about specialized bank you can find here.

Our proposal for Specialized bank license.

The release was prepared on the basis of Banking Activity Review 2016 and  it’s public presentation made by the Bank of Lithuania.

Inga Karulaitytė – Kvainauskienė