March 23, 2018

ECB published the guides to assessments of license applications for banks and fintech credit institutions. The publication of these two guides follows the completion of a public consultation. ECB also published comments received, along with a feedback statement explaining how comments received from stakeholders during the public consultation have been taken into account.

The guide to assessments of license applications for banks explains the general application process and the assessment requirements regarding governance, risk management, and capital, among others. The guide to assessments of license applications for fintech credit institutions explains aspects of the supervisory assessment of license applications that are particularly relevant to the specific nature of banks with fintech business models. It should be read in conjunction with the general ECB guides to the assessment of license applications and fit and proper assessments. The guides offer a practical tool for applicants to increase their understanding of the criteria and to ensure a smooth and effective licensing procedure. A second consultation on an addendum to the guide to assessments of license applications will be conducted at a later stage.

The national competent authorities act as the first point of contact for receiving license applications, while assessments are conducted jointly with the ECB. ECB makes the final decision on granting, extending, or withdrawing a banking license in the euro area. During the assessment process, supervisors evaluate whether an entity complies with the licensing requirements set out in EU and national law. An entity must meet supervisory capital requirements, have an adequate governance and risk management system in place, and ensure that members of its management body pass a fit and proper assessment. Licensing serves by ensuring that only robust banks can enter the market and perform a wide range of activities. To ensure a level playing field, fintech banks must be held to the same standards as other banks.

 

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Keywords: Europe, EU, Banking, Fintech, License Applications, Responses to Consultation, ECB

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