Applying for a permission

Credit Institutions

About

The purpose of this page is to make sure that the application process is fully understood.

This section sets out:

  • What a Credit Institution is and what this regulated activity would allow you to do
  • Authorisation process
  • Additional services
  • Notice of a proposal to establish a representative office in Gibraltar
  • Capital requirements
  • Additional information

What is a Credit Institution and what would this regulated activity allow you to do?

A Credit Institution (more commonly referred to as a bank) receives deposits or other repayable funds from the public and grants credits. The authorisation of banking services falls within the scope of the Financial Services Act 2019. 

Credit Institutions that are permissioned in Gibraltar are also required to be members of the Deposit Guarantee Scheme. Please visit the Gibraltar Deposit Guarantee Board website www.gdgb.gi for further information.

The accepting deposits permission allows an institution to carry out deposit taking and related services such as:

  1. Taking deposits and other repayable funds
  2. Lending including, inter alia: consumer credit, credit agreements relating to immovable property, factoring, with or without recourse, financing of commercial transactions (including forfeiting).
  3. Financial leasing.
  4. Payment services as defined in Article 4(3) of Directive (EU) 2015/2366.
  5. Issuing and administering other means of payment (e.g. travellers’ cheques and bankers’ drafts) insofar as such activity is not covered by point 4.
  6. Guarantees and commitments.
  7. Trading for own account or for account of customers in any of the following:

    (a) money market instruments (cheques, bills, certificates of deposit, etc.);

    (b) foreign exchange;

    (c) financial futures and options;

    (d) exchange and interest-rate instruments;

    (e) transferable securities.

  8. Participation in securities issues and the provision of services relating to such issues.

  9. Advice to undertakings on capital structure, industrial strategy and related questions and advice as well as services relating to mergers and the purchase of undertakings.

  10. Money broking.

  11.  Portfolio management and advice.

  12. Safekeeping and administration of securities.

  13.  Credit reference services.

  14.  Safe custody services.

  15. Issuing electronic money.

     

 

 

 

Application process

Applicants should submit an application form and additional documentation with all relevant documents. We will not consider an application complete if there are any outstanding documents.

The application pack must consist of: 

  • Application Fee;
  • Application Form;
  • Financial Projections. This should to be provided on a quarterly basis for the first year and then monthly for the following 3-5 years. This document should be submitted as an excel workbook with the following tabs and information:
    • Assumptions and inputs including;
      • Key scenarios (for example, customer growth, geographical mix, average customer balances
      • Key drivers (for example, by expenses, and if different products are to be provided, this should be separated by product line).
    • Summary of outputs
      • Setting out the revenue, split between key drivers, cost of sales, operating expenses.
    • Profit and Loss account
    • Balance Sheet
    • Regulatory detail. Should provide detail on the Credit institution’s:
      • Own funds
      • Capital requirement (including credit, liquidity and market risk)
      • Risk rated assets 
      • Details on Ratios over the 3-5 years (detailed in Capital Requirements Directive IV)
      • ICAAP and Recovery plan. This must interlink with both the Profit and loss account and Balance sheet.
      • Stress Test on Financial Projections.

(It must be noted that this is not an exhaustive list, and will vary depending on each credit institution).

  • Regulated Individual Form (for each Regulated Individual);
  • Controller Form (for each Controller);
  • Business Plan;
  • Risk methodology and/or threat assessment matrix; 
  • Mapping assessment of how the application meets the relevant legislative threshold requirements (i.e. statutory/regulatory criteria for licensing under relevant Act); and
  • Any other document the applicant considers the GFSC should take into consideration as part of the application.

Please request cloud access from the Authorisation team in order to submit the application pack via E-mail at authorisations@gfsc.gi with the following information in the subject field: ‘Name of Regulated Firm/Applicant – Application’. Paper copies are not required unless indicated by the Authorisation team.

Please note that we accept signed signature copies sent via e-mail and electronic signatures, which must originate from the Regulated Firm /Applicant’s domain.  

 

Additional Services

Regulated firms that are already authorised by the GFSC may apply to extend their permission to provide additional financial or professional services. If you are seeking authorisation for additional services, please contact the Authorisation team in order for us to determine what documents are required for submission. 

The below sets out an overview of the expected information requested:

  • Application Fee (if applicable);
  • Revised Business Plan;
  • Financial Projections for the next 3 years, clearly identifying the impact of the additional business:
  • Profit and Loss account
  • Balance Sheet
  • Stress Test on Financial Projections
  • Regulated Individual Form (for any new individual carrying out a Regulated Individual function);
  • Controller Form (for any new Controllers within the structure); and
  • Any other document the applicant considers the GFSC should take into consideration as part of the application.

 The Regulated Firm should consider the following:

  • What new services/permissions it requires;
  • The type of new business/activity;
  • Where the business will be sourced;
  • Resources to deal with the additional business;
  • The impact of the additional business on its capital requirements; and
  • What changes are being effected to its systems and controls.

Notice of a proposal to establish a representative office in Gibraltar

Please send us an e-mail with the following information:

  • Registered name of institution in country or territory of incorporation or formation, name under which it carries on business in the country or territory in which it has its principal place of business (if different) and any business name(s) which it uses in these countries or territories.
  • Name(s) that the institution proposes to use in relation to activities conducted by it in Gibraltar after establishment of the representative office. 
  • (Names should be in relevant local language. Where the institution proposes to use in Gibraltar an English translation of the name, the foreign language version should also be given).
  • Address of head office and of proposed Gibraltar office (if known).
  • Legal form of institution (body corporate, partnership, etc.).
  • Country or territory of incorporation or formation and of principal place of business, if different.
  • Authorisations currently held by the institution in country or territory of incorporation or formation (and of principal place of business, if different). Please provide copies of certificates or letters of authorisation (if any). 
  • (If the documents are not in English, a certified English translation should be provided).
  • Primary activities of institution (e.g. commercial lending, corporate finance advice, money market activities).
  • Proposed role of Gibraltar office.
  • Is the institution seeking, or has it ever sought, any other authorisation in Gibraltar (e.g. under the Financial Services Act)? If so, please give particulars.
  • Will the institution employ staff at the Gibraltar representative office? If not, what will the arrangements be? 
  • (In some cases, for example, the premises of a subsidiary or other company may serve as the representative office).
  • Names and functions of main Gibraltar personnel (if known), and likely total number of staff who will work in the representative office.
  • Have home supervisory authorities been informed of the proposal to establish a representative office in Gibraltar, and are they content? Please provide a copy of a letter or other document (if any) informing home supervisory authorities of proposal to establish a representative office in Gibraltar, and copies of any letters of response from such authorities. 
  • (If the documents are not in English, an English translation should be provided.) 
  • If the home supervisory authorities have not been informed an explanation should be given as to why this is the case.
  • Names of all Directors and Controllers (indicating in the case of shareholder Controllers how much of the voting power of the institution each holds).
  • Has the institution ever applied for any authorisation from a supervisory authority in a country or territory other than Gibraltar? If so, give particulars. If any such application was for any reason refused or withdrawn after completion, give particulars.
  • Has the institution ever been censured, warned as to future conduct, disciplined or publicly criticised by, or made the subject of a court order at the instigation of, any government department or agency, professional association or other regulatory body? If so, give particulars.
  • Has the institution or a subsidiary had a winding-up order made in respect of it or been made subject to an administration order, otherwise made any compromise or arrangement with its creditors or ceased trading or has anything analogous to any of these events occurred under the laws of any other country or territory? If so, give particulars.
  • Has any authorisation held by the institution ever been revoked? If so, give particulars.
  • The following documents should also be provided:
    1. A copy of the institution’s memorandum and articles (or equivalent). If the documents are not in English, a certified English translation should be provided. 
    2. A copy of the institution’s latest annual report and audited accounts. If the documents are not in English, a certified English translation should be provided.
    3. Signed Declaration, confirming the following – ‘We certify that the information given in respect of the notice to establish a representative office in Gibraltar is complete and accurate to the best of our knowledge, information and belief and that there are no other relevant facts of which the Commissioner of Banking should be aware of. We undertake to inform the Commissioner of Banking of any material changes’.

Capital Requirements

The capital requirements for a credit institution are set out in the Financial Services (Capital Requirements Directive IV) Regulations (CRD IV), which includes provisions relating to:

  • The definition of regulatory capital;
  • Capital requirements;
  • Disclosures made by firms under Pillar 3;
  • Transitional provisions;
  • Quality of capital;
  • Quantity of capital;
  • Counterpart credit risk (CCR);
  • Credit valuation adjustment (CVA) risk;
  • Leverage;
  • Liquidity; and
  • Disclosures.

A credit institution’s minimum initial and ongoing capital requirement is the higher of:

  • €5,000,000; or
  • The capital calculations as per CRD IV.

 

Additional Information 

The business plan should comprehensively set out:

  • What services the firm intends to carry out and how it proposes to conduct the activity;
  • Board structure and terms of reference, including details of any sub-committees set up by the Board to assist it to carry out its duties;
  • The firm’s risk management function;
  • An assessment of the main risks facing the firm and how these are to be mitigated;
  • The resources that are to be made available and the systems that the applicant intends to employ;
  • Target market;
  • How clients will be sourced;
  • How records will be maintained;
  • How, and by whom, any significant decisions will be made;
  • Structure charts outlining both in-house and outsourced operations;
  • Details of outsourcing arrangements and how the firm will monitor and oversee these, including the controls implemented by the firm on these arrangements;
  • If the applicant forms part of a larger group, details should also be provided of the activities of the group and a description of its structure; and
  • Details of the key internal processes and policies that will be in place, to include but not limited to:
    • General systems and internal controls including details of management information systems to be employed;
    • Comprehensive explanations of reporting lines and segregation of duties;
    • The liquidity/solvency policies. This should include calculations of the liquidity coverage ratio (LCR) and details of how the bank will be meeting the phased LCR threshold amounts specified in CRD IV;
    • The credit and concentration risk policies;
    • An outline of how the bank will identify connected exposures;
    • Policy in respect of related party transactions;
    • The process to be implemented to manage bad and doubtful debt;
    • Remuneration policies;
    • Recovery plan;
    • Details of the compliance and risk management arrangements;
    • Internal audit processes;
    • Outline of complaint handling procedures;
    • The AML/CFT procedures to be put in place;
    • Confirmation of accounting systems to be employed;
    • Record keeping measures;
    • Business continuity arrangements;
    • Terms of reference for the board and each of the Committees to be established both at board level and senior management level; and
    • Conflicts of interest policy.

The GFSC will be seeking evidence that the firm has considered, documented, and implemented the risk, compliance and operational issues associated with the proposed activities. 

Applicants should ensure that the business plan is coherent with the firm’s risk appetite and capacity.

 

GFSC Policy

The preferred approach for the GFSC is to accept applications for banking permissions from institutions that are majority owned by established banking groups from reputable jurisdictions.

The GFSC considers that the support provided by existing banking operations in terms of management structures, controls, systems, liquidity, financial support and expertise to their subsidiaries is a vital component of the GFSC's supervisory approach when considering new applications. The ability of the regulator to rely on such support mechanisms allows local operations to establish, knowing that if external support were required, it would be readily available.

The GFSC may in certain instances and in particular where the applicant is part of a major established financial services group based in a reputable jurisdiction, consider applications for banking operations which do not have a banking parentage.

In order for the GFSC to consider such applications, banking applicants must meet the following additional pre-conditions:

  • The applicant will be directed by a suitably qualified Board including the appointment of appropriate non-executive directors;
  • The four-eyes of the applicant will have relevant banking expertise in the areas that the applicant seeks to conduct its operations;
  • The Controllers of the applicant have the necessary financial and other resources to support the organisation including the ability to inject additional capital, liquidity and management if required to do so by the GFSC;
  • The systems of control adopted by the applicant will not only be appropriate for the banking activities proposed but will also have resilience and redundancy built in to run as a stand-alone operation;
  • Except for treasury operations of significant publicly quoted institutions, the operations and business model of the applicant will be at arm’s length, and in most cases ring-fenced, from the operations and businesses of its Controllers; and
  • The applicant will be significantly capitalised.