In this post we explain why Lithuania Specialized bank license is the best option available to start up an online bank. Do not hesitate to contact me at [email protected] to discuss this matter
WHAT CRITERIA TO CONSIDER WHEN RESEARCHING WHERE TO APPLY FOR AN ONLINE BANK LICENSE
Put it this way, online banking business is for banking what low cost airlines is to air travel therefore the criteria an investor that want to start an online bank must consider would be as follows:
- Low capital requirement
- Low corporate income tax
- Moderate office rental costs
- Moderate employees’ salaries
- A market as large as possible
- An application processes that is not too long and complex
A jurisdiction that provide all those features would be the ideal place to start an online banking business.
WHY IS LITHUANIA THE BEST PLACE TO START AN ONLINE BANKING BUSINESS?
Because Lithuania has introduced a new bank license called the Specialized Bank License and this bank license since 1st January 2017 and Lithuania offers conditions that perfectly match my check list above
- Low capital requirement – Lithuania Specialized bank license requires only 1,000,000 Euros of capital
- Low corporate income tax: Lithuania has the fifth lower corporate income tax in Europe at 15%
- Moderate office rental costs. The cost of the offices in Vilnius the capital was in 2014 238 Euros per M2 per year against for example 718 Euros per M2 in Geneva.
- Low Employees Wages: Bank employee’s wages in Lithuania are 3 times lower than in Switzerland for example
- A market as large as possible: With the passporting that allows a bank licensed in Lithuania to offer their services in more than 30 countries an online bank based there would have access to a 500,000,000 inhabitants market
- Short application process: The bank license can be obtained in 6 months from the time all the documents have been filed and all the process and documents are in English language
WHAT ARE THE DIFFERENCE BETWEEN A SPECIALIZED BANK LICENSE AS THIS LICENSE IS CALLED AND A NORMAL BANK LICENSE?
A specialized bank license is for all purpose a bank license
- The bank license application is handled by the central bank of Lithuania under the supervision of European central bank
- The deposits made by the bank clients shall be guaranteed up to 100,000 Euros as with a normal bank license
- Finally the bank can provide nearly all bank services as follows
Services that can be provided by a Specialized Bank are
|· Payment services;||YES|
|· Receipt of deposits;||YES|
|· Currency exchange;||YES|
|· Issuing of e-money;||YES|
|· Issuing guarantees;||YES|
|· Fund administration;||YES|
|· Financial leasing;||YES|
|· Financial intermediation;||YES|
|· Creditworthiness assessment services; –||YES|
|· Safe-deposit box rental;||YES|
The only restriction is that the bank cannot provide
Investment services, clearing, services related to securities emissions. or manage investment, pension funds or be active by providing other services related to security emissions.
IS THE APPLICATION PROCESS TO OBTAIN A LITHUANIA SPECIALIZED BANK LICENCE COMPLEX?
It is a bank license application process.
So, it is never easy even offshore are there are criteria that need to be fulfilled
In terms of documents preparation, the main step will be
- To prepare the bank license application;
- To draft a program of operations for the first three years of the bank operation
- To collect data on financial institutions managers, shareholders to assure impeccable repute
- To draft a description of the structural organisation of the bank
- To draft of the accounting policy and a detailed description of the accounting organisation;
- To draft manuals of management systems, risk management, IT systems (based on the information given by the client and Its systems they use (or we can recommend IT system)
- To draft a manual of internal control system, assisting in developing
But all this are things we have already done so we can help the client to prepare all this documents in less than 2 months.
Do not hesitate to contact me at [email protected] to discuss this matter