Establishment and authorisation / licencing of banks

The purpose of the present Guide is to inform interested persons about the banking licensing process carried out by the Bank of Lithuania and the European Central Bank, the requirements for banks to be licensed, the list of documents to be submitted together with the application for issuance of a licence, and other key aspects of licensing.

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Banking licence

Pursuant to Article 3(4) of the Republic of Lithuania Law on Financial Institutions, only a credit institution shall have the exclusive right to receive deposits and other repayable funds from non-professional market participants. Pursuant to Article 2(1) of the Republic of Lithuania Law on Banks, a bank shall mean a credit institution set up in the Republic of Lithuania which is licensed to engage in accepting deposits and other repayable funds from non-professional participants of the market and in lending thereof, and assumes the risk and liability related thereto.

The Republic of Lithuania Law on Banks provides for two types of banking licences – a regular bank licence and a specialised bank licence. An entity holding an ordinary banking licence may provide all financial services, provided that this right is not restricted under the Law of Banks and other laws, while a specialised bank is subject to restrictions on investment and some other financial services (an exhaustive list of permitted activities is set out in Article 4(5) of the Republic of Lithuania Law on Banks). The differences in the minimum capital requirements should also be noted, with a minimum capital requirement of €5 million for a regular bank and €1 million for a specialised bank. All other requirements and the authorisation process as well as supervision exercised are identical for both types of banks.

Licensing process

The approach of the Bank of Lithuania to the authorisation process for banks, as well as for other institutions is, as far as possible, open and communication with banks or other institutions normally begins well before an application for an authorisation is submitted to the Bank of Lithuania. Persons planning to apply for a banking licence are advised to contact the Bank of Lithuania as early as possible in the planning process. An early dialogue helps both the Bank of Lithuania and the applicant to understand the licencing requirements, the authorisation process, to understand each other’s expectations and discuss other aspects relevant to ensuring a smooth authorisation process.

The following key steps in the licensing process can be identified:

Ex-ante evaluation: familiarisation of the potential bank's representatives with the regulations applicable in Lithuania, preliminary meetings and discussions with specialists of the Bank of Lithuania, preliminary assessment and discussion of the substantive documents to be provided.
Submitting an application for a banking licence to the Bank of Lithuania: the Bank of Lithuania, within 5 business days, reviews whether all necessary documents have been submitted and, where no formal deficiencies are identified, accepts the application for consideration.
Assessment of an application for issuance of a banking licence and of accompanying documents: the Bank of Lithuania, after starting the procedure of assessment of the application and submitted documents, transfers all data to the European Central Bank. The Bank of Lithuania and the European Central Bank together assess the submitted documents. If any deficiencies are identified, the Bank of Lithuania together with the European Central Bank shall draw up observations pertaining to the submission of additional information or documents and forward them to the applicant for a banking licence.
Adoption of the decision on the issuance of a licence: the Bank of Lithuania or the European Central Bank issues or refuses to issue a banking licence in accordance with the Republic of Lithuania Law on Banks, Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation in the Single Supervisory Mechanism between the European Central Bank and national competent authorities and national designated authorities, and other legal acts.

Statutory timeframe

Pursuant to Article 9(11) of the Republic of Lithuania Law on Banks, the submitted documents shall be examined and a decision on the issuance of a licence shall be taken within 6 months from the date of receipt of the application. Where the documents submitted are deficient in form or content, or where not all the documents or data necessary for the decision have been submitted, upon a reasoned request for additional documents and/or data by the supervisory authority or upon submission thereof by the licence applicant, the decision shall be taken within 6 months of the date of receipt of the additional documents and data. In any case a decision to issue or refuse to issue a licence or authorisation refusal shall be taken within 12 months of the receipt of the application.

Banking licence fee

Prior to applying for a banking licence, including that of a specialised banking licence, a state levy is charged to be paid into the account of the State Tax Inspectorate (STI); the state levy currently is set at €4,157 (the rates of state levies are established under Resolution No 1458 of the Republic of Lithuania Government of 15 December 2000). The procedure for the generation of online banking orders to the collection accounts of the STI and numbers of the income collection accounts can be found at website of the STI.

Ex-ante assessment

A person planning to apply for a banking licence may request an ex-ante (informal) assessment of an application for a banking licence. Upon receipt of such a request, the Bank of Lithuania shall, within a reasonable period of time, carry out an ex-ante assessment of the submitted data, information and documents, advise the potential applicant and carry out other preparatory actions. If necessary, the European Central Bank may also be engaged in the ex-ante assessment.

The following key aspects are within the scope of the ex-ante assessment:

the bank’s business model (services, customers, strategy and growth) and the financial capacity to implement the same;
risks associated with the bank’s business model and arrangements for managing them;
the bank’s shareholders and sources of funding;
Managers of the Bank;
Organisation of the bank’s activities;
Preparation for the licensing process and licensed activities.

In order to make the ex-ante assessment process truly efficient, the applicants are strongly recommended to properly get prepared for the process, i.e., to compile the package of documents to the fullest extent possible, to draw the attention of the Bank of Lithuania to any issues that may arise, etc.

An ex-ante assessment is particularly recommended when planning a transaction for the acquisition of a qualifying holding in the authorised capital and/or voting rights in a bank already licensed, given the complexity of the procedure and the time limits set by law.

Key requirements for a bank being established or licensed

Considering that at the time of issuing a banking licence, a bank being established or licensed must be prepared to meet all the requirements imposed on it as an operating bank, the Bank of Lithuania would like to ensure that detailed documentation is provided readily in relation to the application. In assessing the critical aspects that may determine the granting of a banking licence, the following key elements can be identified:

Adequacy of submitted documents: the documents submitted must comply with the requirements of the legal acts regulating banking activities and their supervision; the applicant shall submit all correct data established in legal acts or requested additionally
Compliance with the minimum capital requirement for banks: the capital of a regular bank must be not lower than €5 million and that of a specialised bank – €1 million. Please note that the capital requirement may be higher depending on the activities the bank is engaged in
Fitness and propriety of the firm and its shareholders or holders of voting rights: entities acquiring (holding) a qualifying holding in the bank’s authorised capital and/or voting rights or, in the absence of such persons, 20 founders acquiring (holding) the major part of the authorised capital and/or voting rights (where the legal person is already established – the shareholders) must be of impeccable repute and be financially sound with transparent origin of their funds
Fitness and propriety of the firm’s management: the management must be of impeccable repute, hold qualification and experience that would allow them to adequately perform their duties (in addition, at least one head of the bank’s administration must speak Lithuanian)
The operating plan must be consistent with the capacities of the bank's founders (shareholders or holders of voting rights) to implement it, while the prospective bank must, at the time of authorisation, be prepared to provide financial services in a safe and sound manner

The Articles of Association, operating plan, management and organisational structure, risk management system, remuneration policy and practice, accounting system, internal control system, technical, information and technological security means, premises, insurance of property of a bank applying for a licence must ensure safe and sound activities of the bank and comply with the relevant legal acts. The bank must also meet other requirements set by the Law on Banks, including the requirements for legal form, minimum capital, and registered office.

Minimum number of bank management staff

On the basis of the provisions of legal acts regulating the activities of banks and inter-institutional recommendations, a minimum number of a bank’s management staff can be 10 persons:

at least 3 members of the Board (+3);
at least 3 members of the Supervisory Board (+3);
Head of the administration and Deputy Head (+1, head of the administration or the deputy head must be the Chairman of the Board);
Head of the internal audit unit (+1, can be a member of the Supervisory, but an independent person is recommended);
Audit Committee (+0, can be members of the Supervisory Board);
Risk Committee (+0, can only be members of the Supervisory Board);
Credit Committee (+0, can be Board members);
Chief Technical Officer (CTO) (+1, for the segregation of business execution, organisation and supervision, other than a member of the Board or Supervisory Board is recommended);
Chief Risk Officer (CRO) (+0, should be a member of the board);
Chief Legal Officer (CLO) (+1, for the segregation of business execution, organisation and supervision, other than a member of the Board or Supervisory Board is recommended);
Chief Financial Officer (CFO) (+0, this should be a member of the board).

Please note that the list is only an indicative minimum number of a bank’s staff, therefore, considering the complexity, scale, geography and other factors of the activities of the bank being authorised, an increase in the number of persons organising the bank’s activities may be required prior to granting the licence. This list is not established in legislation and cannot be seen as the official view of the Bank of Lithuania. In the future, this list may be changed.

Documents and information to be submitted to the Bank of Lithuania

A detailed list of documents to be submitted together with the application for a banking licence is set out in the Annex to the Rules for Licensing of Bank Activities approved by the Resolution No 03-196 of the Board of the Bank of Lithuania of 22 December 2016 on the approval of the rules for licensing of bank activities.

The documents to be submitted to the Bank of Lithuania are subject to the requirements set in the General Regulations on the Submission and Examination of the Applications for Authorisation of Financial Market Participants Supervised by the Bank of Lithuania and on the Granting of Authorisation approved by Resolution No 58 of the Board of the Bank of Lithuania of 6 May 2004 on the approval of the general regulations on the submission and examination of the applications for authorisation of financial market participants supervised by the Bank of Lithuania and on the granting of authorisation.

Examination of submitted documents

The submitted documents are examined and evaluated by specialists from the Bank of Lithuania and the European Central Bank, who form a common opinion and conclusions on the granting of the licence.

If the assessment determines that additional information, data and/or documents are required for a decision to be taken, the Bank of Lithuania, together with the European Central Bank, shall formulate comments and provide them to the applicant for a licence. Regular communication between the applicant and the supervisory authority takes place throughout the assessment, including meetings with representatives of the licence applicant as required.

The length and detail of the assessment depends on the specifics of each individual application. The documents shall be examined following the principles of reasonableness and proportionality.

All applicants have direct access to specialists of the Bank of Lithuania responsible for examining the submitted documents. The Bank of Lithuania is prepared to provide all information related to the authorisation process, inform about the progress of the process, and seeks to build a cooperation-based relationship between the Bank of Lithuania and financial market participants both during the licensing process and thereafter.

Public List of Financial Conglomerate Undertakings

According to the amendments to the Republic of Lithuania Law on the Supplementary Supervision of Entities in a Financial Conglomerate (hereinafter – the SSEFC Law) that entered into force on 1 January 2022, a mixed financial holding company, if it is a parent undertaking with a head office in the Republic of Lithuania, a financial holding company, if it is a parent undertaking with a head office in the Republic of Lithuania, and other financial holding companies, if they are parent undertakings, or mixed financial holding companies, if they are parent undertakings, where they are obliged to comply with the Republic of Lithuania Law on Banks in the course of their operations and where they are required to comply, on the sub-consolidated basis, with Regulation No 575/2013 of the European Parliament and of the Council (EU) of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012, must apply to the Bank of Lithuania for inclusion in the Public List of Financial Conglomerate Undertakings (hereinafter – the List).

When applying for inclusion in the List, the entities referred to earlier must submit to the Bank of Lithuania and to the supervisory authority responsible for joint (consolidated) supervision, if it is not the Bank of Lithuania, the documents and/or data referred to in Article 121(2) of the SSEFC Law, except for the cases set out in par. 5 of that Article. It should be noted that financial holding companies or mixed financial holding companies that are not subject to the provisions of that Article in accordance with par. 5 of that Article must provide the Bank of Lithuania with documents and information in substantiation thereof. Financial holding companies or mixed financial holding companies must meet the conditions for inclusion in the List or, where applicable, for exemption from Article 121(2) of the SSEFC Law.

It should be also noted that in accordance with Article 121(10) of the SSEFC Law, where the Bank of Lithuania is not the supervisory authority carrying out joint (consolidated) supervision or where the Bank of Lithuania carries out only joint (consolidated) supervision, the assessment of a particular financial holding company or mixed financial holding company shall be carried out and a decision on it shall be taken jointly with another supervisory authority. Accordingly, financial holding companies or mixed financial holding companies shall, within their competences, ensure that the necessary documents, data and/or information are made available in a timely manner to all supervisory authorities involved in the assessment.

It should be noted that in accordance with Article 121(3) of the SSEFC Law, in the case where the application for inclusion in the List is made in connection with the acquisition of a qualifying holding in the authorised capital and/or voting rights under the procedure laid down in Article 24 of the Law on Banks, the estimation of duration of the assessment period laid down in Article 25(4) of the Law on Banks shall be suspended for a period of more than 20 business days, for a duration of the examination of the application for inclusion in the List, and renewed upon the adoption of a decision to include or to refuse to include of the undertaking in the List.

Before applying for inclusion in the List, it is necessary to pay a state levy of €149 to the account of the State Tax Inspectorate (STI) (the levy amounts are set by Resolution No 1458 of the Government of the Republic of Lithuania of 15 December 2014 on the approval of specific amounts of state levies and of the regulations for the payment and return of these levies). The procedure for the execution of online banking orders into the income collection accounts of the STI budget and the numbers of income collection accounts are available on the website of the STI.

Laws and legal acts regulating the activities and authorisation of banks

³ – Lithuanian consolidated version valid as of 2 January–30 June 2017. English version last amended on 9 June 2011.

⁴ – Lithuanian consolidated version valid as of 1 March 2017. English version last amended on 26 November 2015.

⁵– Lithuanian consolidated version valid as of 1 March–30 June 2017. English version last amended on 12 March 2015.

⁶– Lithuanian consolidated version valid as of 1 November 2016. English version last amended on 14 October 2014.

⁷– Lithuanian consolidated version valid as of 20 December 2022. English version last amended on 30 January 2023.

⁸– Lithuanian consolidated version valid as of 31 March 2017. English unofficial translation as of 24 January 2008.