The term ‘credit institutions’ refers to institutions which carry out banking activities and thus, as opposed to ‘financial institutions’, receive deposits or other repayable funds and grant credit, at a profit. Credit institutions in Malta are regulated under the Banking Act (Chapter 371, Laws of Malta), as supplemented by the Banking Rules issued by the industry regulator, namely the Malta Financial Services Authority (‘MFSA’).
Under Maltese law, a licensed credit institution is, however, not limited to banking activities per se and is able to provide a very wide range of services, namely:
- Financial leasing;
- Money transmission services;
- Issuing and administering means of payment (credit cards, travellers’ cheques and bankers’ drafts and similar instruments);
- Guarantees and commitments;
- Trading for own account or for account of customers in:
- money market instruments (cheques, bills, certificates of deposit and similar instruments);
- foreign exchange;
- financial futures and options;
- exchange and interest-rate instruments;
- transferable securities.
- Participation in securities issues and the provision of services related to such issues;
- 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;
- Money broking;
- Portfolio management and advice;
- Safekeeping and administration of securities;
- Credit reference services;
- Safe custody services.
An application for a licence to operate as a credit institution must be submitted to the MFSA on the requisite forms and be accompanied by the following:
- a copy of the Memorandum and Articles of Association of the institution;
- audited financial statements for the last three years (if applicable);
- a business plan including the structure, organisation and management systems of the prospective bank;
- identity of all directors, controllers and managers of the institution;
- identity of all shareholders with qualifying shareholding; and
- identity of the individuals who will be effectively directing the business of the prospective bank;
- additional information as deemed fit by MFSA on a case by case basis.
The MFSA will NOT grant a licence unless:
- its own funds amount to not less than EUR 5,000,000. This may vary from time to time.
- 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;
- MFSA is satisfied that effective supervision of the company can be exercised.
An application for a credit institution licence is decided within 6 months from receipt, by MFSA, of a duly completed application and any additional information.
The following fees are by prospective and licensed financial institutions:
- A one-time non-refundable application and processing fee of €12,500 payable upon submission of an application by a prospective credit institution applying for a licence.
- A one-time licensing fee of €18,000 payable by a credit institution which has been granted a licence.
- Annual supervision fee equivalent to 0.000175 of its deposit liabilities as reported at the end of the preceding year, but in any case not less than €21,250 and not more than €500,000.
- For a Representative Office, a fee of €3,600 is payable upon establishment and in each subsequent year.