Imagine transforming a financial crisis into an opportunity. In 2014, Lithuania’s credit unions were in turmoil. The solution? Specialised bank license Lithuania. Born from the need for reform, these institutions started to reshape the credit sector.
But there’s more.
Specialised banks aren’t just for fixing local issues – they’re a golden ticket for innovators like you. Here’s the real scoop:
Not only did the Government of Lithuania successfully obtain a special concession from the European Commission, but they also paved the way for a banking concept effective from January 1, 2017. What began as a tool to tackle Lithuania’s credit sector challenges has now become an attractive solution for international financial service providers eager to embark on banking activities while employing innovative business models.
Don’t miss out on this game-changing opportunity. Read more about the Lithuanian specialised banking license and how PSP Lab can help you to unlock the untapped potential and challenge the banking landscape.
Specialised Bank License Lithuania Explained
Difference between traditional banks and specialised banks
Lithuania’s Law on Banks reveals two banking licences: regular and specialised. While a regular bank licence grants access to all financial services (unless restricted by law), a specialised bank licence Lithuania comes with certain limitations on investment and other services.
Here’s the exciting part:
Specialised banks have lower entry barriers, with a minimum capital requirement of just €1 million, compared to €5 million for regular banks. Plus, they still provide the same safety net, insuring individual deposits up to €100,000 under the deposit insurance scheme, just like their traditional counterparts.
However, it’s worth noting that the €1 million minimum might not be sufficient to obtain specialised bank authorisation. An institution needs additional capital for development operations and finances the negative cash flow until the breakeven can be reached. This lower capital requirement enables a wider investor range to establish specialised banks. As a result, they can establish a specialised bank with lower initial capital expenditure than the fully authorised bank.
A specialised banking licence (specialised bank license Lithuania), provided by the European Central Bank via the Bank of Lithuania (Central Bank and financial regulator), is governed by the European Union and European Economic Area (EU/EEA) passport regime. The passport empowers an institution with a specialised bank license in Lithuania to enter the European financial market without requiring extra licensing.
Services that can be offered by a specialised bank in Lithuania
The table above shows legal definitions of services offered by entities with specialised bank license Lithuania. If we speak more casually, the specialised banking license allows the provision of the following traditional banking services:
- Lending
- Payment services
- Receipt of deposits
- Currency exchange
- Issuing of e-money
- Issuing guarantees
- Factoring
- Leasing
- Issuing payment cards and acquiring
But restrictions concerning the following financial services apply:
⊗ Investment or pension fund management
⊗ Securities brokerage
⊗ Investment advice
Examples of entities holding specialised bank license Lithuania
There are 7 specialised banks in Lithuania. The list of specialised banks in Lithuania includes:
- AB Mano bankas. Originating in 2008 as a credit union called “Mano Unija,” Mano bankas transitioned to become the first entity with a specialised bank license Lithuania in October 2018. Combining digital technology and a modern approach to cater to client’s needs, creating a more efficient and personalised banking experience, the bank focuses on providing business loans and payment services to businesses and individuals.
- European Merchant Bank UAB: Founded by a serial entrepreneur with a history of establishing successful ventures, including OpenPayd, Ozan SuperApp, and Eurotrader, this bank offers a comprehensive package for fintechs and businesses. They have a single API-based software and embedded finance expertise and provide accessible lending and payment solutions for businesses of all sizes.
- Finora Bank UAB. Originating from AS Finora Group, which started operations in Estonia in 2014 and expanded to Lithuania in 2019 (specialised bank license Lithuania acquired in 2022), Finora Bank aspires to be the world’s top financial partner for SMEs, entrepreneurs, and creatives. It personalised services such as loans, leasing, factoring, and guarantees, primarily for businesses.
- AB Fjord Bank. Originating in Lithuania with Norwegian roots, the bank initially provided services in Lithuania before expanding to DE, ES, EE and NL. Specialising in consumer loans, online credits, and time deposits, it offers clients a simple, convenient, and fast online application process for various financial needs.
- Saldo Bank UAB: Boasting over a decade of experience in the financial sector that started in Finland, Saldo Bank creates automated financing solutions that cater to everyday customer needs in Finland, Sweden, and Lithuania. Offering a range of services, including consumer loans, SME loans, and term deposits, Saldo Bank is committed to responsible lending, utilising advanced technology and “open banking” information to ensure seamless and secure financial services for its customers.
- UAB GF bankas: Began its operations in 2005 as a startup. In 2008, it joined the French bank Societe Generale group and, later, in 2013, became part of the Swedish financial group. Finally, since 2020, it has been operating as a specialised bank providing various consumer loans and time deposits.
- UAB SME Bank: The bank was founded in 2021 by the co-founder of SME Finance UAB, the largest non-banking alternative financing company in Lithuania, established in 2016. It supports small and medium-sized businesses with tailored banking and lending services, offering accounts, payments, loans, and deposits to legal entities, including non-residents and EMIs.
One more example is Revolut, which started as an electronic money institution in Lithuania. It used to have a specialised bank license Lithuania until it managed to upgrade its license to a “full” license.
Conclusion
In conclusion, the specialised banking license represents a remarkable opportunity in the EU/EEA landscape, unlocking the potential for innovative financial service providers to disrupt traditional banking. However, it’s crucial to remember that this license is best suited for those who plan to engage in conventional banking activities and strongly commit to the Lithuanian market.
The Process of Obtaining a Specialised Banking License in Lithuania
Navigating the multi-step process to obtain a specialised banking licence in Lithuania is an exciting journey overseen by the Bank of Lithuania, the nation’s central bank and financial regulator.
Ready to embark? Follow these crucial steps:
- Craft a compelling application: Outline your business plan, financial projections, target market, and proposed services, showcasing your ability to meet capital requirements and comply with regulations.
- Master capital requirements: show that you can maintain an initial capital of at least €1 million, demonstrating ongoing capital adequacy, including ICAAP and ILAAP assessments.
- Establish robust governance: Assemble a qualified management team and board of directors, and implement a comprehensive risk management framework and internal control system.
- Ace fit and proper assessments of the management team, board members, and significant shareholders by the BoL: persuade the BoL with your financial standing (relevant for shareholders), professional qualifications, and stellar reputation.
- Champion regulatory compliance: show your commitment to comply with laws and guidelines, including AML, CTF, consumer protection, and data protection laws and regulations.
- Submit essential documentation: Prepare a range of policies and procedures, including, among other things, internal policies and procedures and information on the applicant’s governance structure, including the following Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Policy, Know Your Customer (KYC) Policy, Risk Management Policy, Credit Risk Policy, Operational Risk Policy, Market Risk Policy, Liquidity Risk Policy, Interest Rate Risk Policy, Information Security Policy, Cybersecurity Policy, Data Protection and Privacy Policy, Business Continuity Policy, Outsourcing Policy, Customer Complaint Resolution Policy, Corporate Governance Policy, Conflicts of Interest Policy, Fraud Prevention Policy, Financial Crime Policy, Remuneration Policy, Internal Audit Policy, Compliance Policy, Capital Management Policy, Investment Policy, Anti-Bribery and Anti-Corruption Policy, Whistleblowing Policy.*
*The list is not complete; it was presented for illustrative purposes. You may know some policies under a different name. Documents you may need to apply for a specialised bank license Lithuania vary based on your business model.
Once your application is submitted, the Bank of Lithuania will transfer all data to the ECB, and together they will scrutinise every detail. If any deficiencies are identified, both institutions will draw up observations and request additional information or documents from you. Upon a successful assessment, you will be issued a specialised bank license Lithuania.
Unlock the power of PSP Lab to obtain your specialised banking license
Our track record? Proven. Our team? Experienced. Our mission? Help you navigate the complex world of specialised banking licenses. PSP Lab has your back, guiding you through the intricate financial services landscape, so you can confidently address pain points and fears. We understand the importance of innovation and agility in specialised banking, and our expertise enables us to provide tailored solutions that cater to the unique needs of our clients.
Services designed for success:
- Tailor-made consultations: Assess your needs and create a realistic roadmap tailored for you.
- Regulatory compliance guidance: Develop and implement policies and procedures that adhere to the ever-changing regulatory environment, including AML/CTF, credit risk, information security and data protection, and consumer protection regulations
- Documentation preparation: Prepare and submit all necessary documentation for the specialised banking license applications, including business plans, financial projections, ICAAP, ILAAP, and various internal policies and procedures.
- Answering regulator’s questions: Assist you in addressing any queries raised by regulators during the licensing process.
- Ongoing support: Maintain compliance and adapt to regulatory changes with our guidance post-authorisation.
By partnering with PSP Lab, you streamline obtaining a specialised banking license Lithuania, ensuring that your businesses are well-positioned to succeed in the rapidly evolving financial services industry. Our team’s expertise, personalised service, and ongoing support provide clients with the peace of mind they need to focus on building and growing their businesses while we take care of the licensing process.
Benefits that make a difference
- Expertise: Trust our deep understanding of the licensing process and regulatory compliance for accurate, up-to-date advice.
- Peace of mind: Focus on building your business without the fear to waste time and money without achieving results while we oversee the licensing process.
- Personalised service: Get customised solutions that cater to your unique needs.
