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Information for Cyprus Expats on applications for a Cyprus Banking Licence
Following convergence of the former "international" banking sector with the "domestic" banking sector in January 2006, applications from foreign banking institutions for conducting banking business in Cyprus are examined under a new framework which makes no distinction between "domestic" and "international" or "offshore" operations.
Applicant banks originating from third/non-European Union countries are expected to be institutions enjoying a good reputation internationally with an established track record of growth and profitability. Banking business licences will be granted only to banks licensed in jurisdictions where in the opinion of the Central Bank of Cyprus, proper licensing and banking supervision are exercised and whose banking supervisory authorities subscribe to all the recommendations/ principles embodied in the various papers issued by the Basel Committee on Banking Supervision. Applicant banks should also originate from jurisdictions which enjoy a stable economic and political environment.
In addition, applicant banks should, inter alia, have a widespread and transparent ownership and, preferably, be listed on a recognised stock exchange, enjoy high ratings by a recognised credit assessment institution, have a strong capitalisation and no significant concentration in lending and deposits or related party business. There are also minimum standards with regard to the suitability of the management, directors and controllers as well as the financial soundness of the prospective bank to be established in Cyprus.
In this respect, it should be noted that the Central Bank of Cyprus gives preference to applications from existing foreign banks for the establishment of branches as opposed to the local incorporation of new banking subsidiaries.
Notwithstanding the above, as from 1 May 2004 credit institutions licensed by the competent authorities of another member state of the European Union may provide banking and investment services in Cyprus by establishing a branch or by offering their services on a cross-border basis, without the need of obtaining a banking business licence from the Central Bank of Cyprus, provided that they possess a relevant authorisation from their home supervisory authority for carrying out such services ("single passport" principle).
© Source Cyprus Press & Information Office
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