Discretionary nature of the CBoM’s right to grant or deny the licence and/or approval should be taken into the account by the bank's founders.
When deciding on granting the license and/or approval, the CBoM must assess the eligibility and financial condition of the applicant based on the following:
- Reputation of the applicant with respect to its financial and business activities, including whether the applicant’s property has been subject to bankruptcy proceedings and/or whether the applicant – natural person has occupied a managerial position in the bank or any other corporate entity at the time such an entity has been subjected to bankruptcy proceedings.
- Indicators that may be of importance for the assessment of the applicant’s influence on risk management in a bank reputation, relevant professional capabilities and experiences of parties who will be proposed by the applicant to run the banking operations after the acquisition of qualified participation.
- Financial condition of the applicant, especially in relation to the kind of operations performed by the bank in which qualified participation is acquired.
- Capabilities of the bank to adhere to the provisions of the law, in particular those regulating whether a group which member the bank is to become has such an ownership structure which enables efficient supervision, efficient exchange of information between the competent supervisory authorities and determination of division of responsibilities among the authorities.
- The existence of valid reasons to suspect, pursuant to regulations governing the prevention of money laundering and terrorist financing, that the acquisition involves or may involve money laundering or terrorist financing, or that such an acquisition could increase the risk of money laundering and terrorist financing.
Application for a bank license
A bank may be founded by domestic and foreign legal persons and/or natural persons.
A bank may have one founder.
The financial amount of founding capital may not be less than EUR 5 million.
The bank founders have to submit to the CBoM the application for a bank license, supported by the following documents:
- Authorization for a person which will cooperate with the CBoM in the procedure of discussions on the application for a bank license.
- Proposal of the bylaws (i.e. draft of the articles of association).
- Statement of the founders on the financial amount of the founding capital and evidences on sources of these funds.
- Documents and information on legal persons with qualified participation in a bank, which specifically contain a statement of registration or other appropriate statement from public register, financial reports for the last three years with authorized external auditor opinion, bank related parties and their connected interest, including data on parties that have significant influence based on ownership, or in any other way, on the operations of such group of related appropriate document of the supervisory authority that there are on obstacles for a foreign bank or other financial institution to be founder of a bank.
- Documents, data and information on natural persons with qualified participation in a bank, which specifically contain their names and addresses of permanent or temporary place of residence and other identification data, appropriate evidence on sources of financial amount of founding capital, bank related parties and their connected interest.
- Biography data on proposed members of the board of directors that as a minimum contain the following: information on identification, professional qualifications and working experience and information on their achieved and planned education.
- Business plan of the bank for the first three years, which specifically contains an overall strategy of a bank, expected targeted market, projections of the balance sheet and income statement and cash flow projections.
- Proposal of a strategy for capital management and strategy for risk management in a bank.
- Documentation on technical capabilities and organizational structure, which specifically contains evidence on the use of business premise and equipment required for the performance of projected activities, proposal of rules and regulations on organization and job position scheme, and detailed description of organization of accounting and information technology (IT) support.
Besides the aforementioned documentation and information, the CBoM may require the bank to submit additional information and data. It should be noted that – in this phase of the proceeding – it will be very important to demonstrate the following:
- The financial amount of founding capital may not be less than EUR 5 million. However, since start of business operations will likely effectuate operational losses during the initial phase of the bank’s work, it will be opportune to allocate not less than EUR 6 million of the founding capital
- In addition to that, since founding capital must be paid fully before the bank is registered in the Central Register of the Commercial Corporations (the CRCC), it shall be opportune to transfer founding capital to a bank having its registered seat in Montenegro, i.e. to a special (escrow) account. Such transaction will indeed simplify respective anti money laundry (AML) inspection of source of the founding capital and provide the CBoM with an evidence on to what extent is serious intention of the founders to create bank in Montenegro.
Meeting prior to the submission of application
A meeting of the authorized representatives of the CBoM with potential bank founders upon the request of the parties which intend to found a bank, whose initial contribution enables qualified participation in a bank, shall be held prior to the submission of application and it may be attended by other bank founders.
The potential bank founders shall inform the CBoM representatives at the meeting:
- Planned timeframes for founding a bank and submission of the application on granting a bank license.
- Bank’s business strategy.
- Its financial condition and performance, including information on related interests.
- Dynamics of bank’s development with regard to the increase in capital, deposit and loan potential.
- The manner of risk management in a bank.
Minutes from the meeting shall be signed by one representative of the CBoM and one representative of the founders.
Deciding on the application
The CBoM shall decide on the application no later than 180 days after the bank license application has been submitted and issue a final decision on application.
The CBoM shall deny the application if:
- Prescribed or requested documentation and data has not been submitted by founders, or the submitted documentation contains untrue or inaccurate data.
- Proposed bank bylaws is not in compliance with the law.
- The proposed members of the board of directors do not meet the conditions to be elected as members of the board of directors as determined by the law.
- One or more founders owning more than 5% of participation in bank’s capital or voting rights do not meet the conditions for acquisition of qualified participation in a bank as specified by the law.
- The bank business plan is not qualitatively prepared using appropriate methodologies, the contradiction between particular elements of business plan is evident, or projected balance sheet and income statement of a bank or cash flows are not based on realistic assumptions.
- The ownership structure of a bank disables effective bank supervision.
- The law and other regulations in the country of bank founders disable supervision on consolidated basis.
In case of negative decision of the CBoM, an administrative dispute may be carried out by the prospective founders before the Administrative court of Montenegro.
Next phase: Incorporation & Registration