The setting up of Malta banks or Malta credit institutions, and the pertinent legislation is founded on European Union legislation and is compliant with the Basle Core Principles. Any company which intends to carry out the business of banking shall prior to the commencement of any such business, file an application for a licence with the Malta Financial Services Authority (MFSA).
An application for a Malta banking licence may be filed for the following types of establishments:
- branches of foreign banks;
- subsidiaries being legally independent institutions, wholly or majority owned by a credit institution which is incorporated either in Malta or in a foreign country;
- joint ventures.
A credit institution licenced or holding an equivalent authorisation in a Member State or EEA State are entitled to exercise its rights under European Union Law. Generally, a company shall be granted a licence solely if:
- its own funds amount to not less than € 5,000,000;
- there are at least two individuals who will effectively direct the business of the credit institution in Malta;
- 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;
- 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.
Malta Branch of an Overseas Credit Institutions
A branch constitutes a fundamental part of the institution to which it belongs. A licence issued to an institution incorporated outside Malta to operate its banking business through a Malta branch is consequently deemed to having been granted to that institution as a whole. In the case of an institution whose principal place of business is in a country outside Malta, the Authority may at its discretion, consider that the minimum criteria for authorisation are fulfilled if:
- The foreign banking supervisory informs the MFSA that it is satisfied with respect to the prudent management and overall financial soundness of the applicant; and
- The MFSA is satisfied as to the nature and scope of the supervision exercised by that country’s relative Authority.
The MFSA will examine the planned business of the proposed Malta branch, its internal controls, accounting and other records and personnel and management arrangements. If there are any concerns, the MFSA will discuss them with the applicant and where necessary recourse is made to the foreign competent authority. The MFSA may also require information regarding directors, controllers and managers of the overseas institutions operating through branches in Malta, even though these may be less detailed than that required from institutions registered in Malta.
A company which is licenced or which holds an equivalent authorisation outside Malta, and which carries on the business of banking can establish a representative office in Malta only after it has given at least two months’ notice to the MFSA that it intends establishing such office.
The notice ought to specify the name it is proposing to use in relation to the activities of the representative office and the address of such office. Furthermore, the notice shall be accompanied by a certified copy of the authorisation of the company to conduct the business of banking in a country other than Malta. The MFSA may also require the presentation of such additional information or documents as it may reasonably to require.