ECB Consults on Part 2 of Guide to Assessments of License Applications

Part 2 of the Licensing Guide focuses on the assessment criteria for capital requirements and program of operations, including business plans. While the national competent authorities act as the first point of contact for licensing applications, their assessments are conducted jointly with ECB, which is the competent authority for making the final decision to grant, extend, or withdraw a banking license in the euro area. As part of its evaluation of license applications, ECB assesses capital needs. Therefore, to ensure consistent application of practices within the Single Supervisory Mechanism, Part 2 of the Licensing Guide explains the stance of ECB on the expected capital at the time of authorization. Part 2 also indicates the main topics of interest to supervisors when they assess the program of operations. These include:

• Business model and associated risk profile of a credit institution
• Situation of the credit institution within the economic context,the business environment, and its financial projections
• Clarity and effectiveness of the organizational structure of the institution and its governance arrangements
• Internal control and risk management framework and IT infrastructure of the credit institution

The Licensing Guide is intended as a practical tool to support those involved in the process of authorization and to ensure a smooth and effective procedure and assessment, but it is not legally binding in nature. 

Related Links

• Press Release
• Consultation (PDF)
• FAQs on Part 2 of Guide
• Part 1 of Guide for Banks (PDF)

Comment Due Date: October 25, 2018

Keywords: Europe, EU, Banking, License Applications, CRR, FAQ, ECB