The setting up of banks or credit institutions in Malta is regulated by the Banking Act (Cap. 371 – Laws of Malta) which came into force on 15th November, 1994 and was further amended in 2004. The Banking Act, which replaced the Banking Act, 1970 has adopted European Union Directives as the main reference for the regulatory concepts and supervisory practices which it introduced. Alongside the Banking Act are also the Banking Rules which are binding on licence holders and others as may be specified therein.
Any company which intends to carry out the business of banking or of issuing electronic money in Malta shall prior to the commencement of any such business, file, in writing an application for a licence with the MFSA.
The applicants may seek to obtain a licence for the following types of establishments:
i. Branches of foreign banks Such operating entities do not have a separate legal status and are thus integral parts of the foreign credit institution
ii. Subsidiaries being legally independent institutions, wholly or majority owned by a credit institution which is incorporated either in Malta or in a foreign country;
iii. Joint ventures being legally independent institutions controlled by two or more parent institutions being either foreign or domestic and not all of which being necessarily credit institutions.
A credit institution licensed or holding an equivalent authorisation in a member state or EEA State shall be entitled to exercise its rights under European Community Law
A company shall be granted a licence only if:
(a) its own funds amount to not less than EUR 5,000,000, or in the case of electronic money institution to not less than EUR 1,000,000. The MFSA may vary these amounts from time to time by Banking Rule.
(b) there are at least two individuals who will effectively direct the business of the credit institution in Malta;
(c) all qualifying shareholders, controllers and all persons who will effectively direct the business of the credit institution are suitable persons to ensure its prudent management;
(d) the Authority is satisfied that there are no close links between that company and another person(s) which through any law, regulation, administrative provision or in any manner prevent the company from exercising effective supervision of that company under the provisions of the Banking Act.
Accompanying Documentation
An application form should be submitted in writing to the MFSA and shall be accompanied by the following documents:
(a) a copy of the Memorandum and Articles of Association of the institution;
(b) audited financial statements for the last three years (if applicable);
(c) a business plan including the structure, organisation and management systems of the prospective bank;
(d) identity of all directors, controllers and managers of the institution;
(e) identity of all shareholders with qualifying shareholding; and
(f) identity of the individuals who will be effectively directing the business of the prospective bank.
For the Authority to grant a licence, it must be satisfied that the applicant fulfills the minimum criteria relating to prudent conduct, fit and proper persons, integrity and professional staff and safety of potential depositors. The Authority is guaranteed the fulfilment of said criteria only if the applicant institution and other relevant parties provide such information and documents which it requires to be submitted in connection with the application.
