Approved in the meeting of the Bank of Latvia Council,
July 15, 1993, Resolution No 9/3.
President of the Bank of Latvia
E. Repse
The regulations are worked out in accordance with the following Laws of the Republic of Latvia and their Supplements:
- Law "ON BANKS" (passed on May 19, 1992),
- Law "ON THE BANK OF LATVIA" (passed on May 19, 1992),
- Law "ON ENTREPRENEURIAL ACTIVITY" (passed on September 26,
1990),
- Law "ON STOCK-HOLDING COMPANIES" (passed on May 18, 1993),
- Law "ON ACCOUNTING" (passed on October 14, 1992),
- Law "ON COOPERATIVE (JOINT ACTIVITY) COMPANIES" (passed on
August 6, 1991),
- Law "ON FOREIGN INVESTMENTS IN THE REPUBLIC OF LATVIA" (passed
on October 30, 1991),
as well as normative statements issued by the Bank of Latvia.
The Regulation determines the procedure for granting a license to credit institutions (banks, banking offices, savings and loan associations, pawnshops) and their subsidiaries (branches, representative offices) within the Republic of Latvia; for obtaining a license for foreign banks and their subsidiaries (branches, representative offices) to commence activity in the Republic of Latvia; it also determines the procedure for the credit institution to obtain the Bank of Latvia permit to increase or decrease the basic capital, modify the Board or location.
Credit institution may be established by private persons or legal entities the period of activity of which is not less than 2 financial years.
The number of founders may not be less than three, except of in cases when a credit institution is established by state or municipality, or foreign credit institution.
The majority of the council members of the credit institution must be the Republic of Latvia citizens or permanent residents.
In order to obtain a license to commence activity, the founders of the credit institution must submit the following documents to the Bank of Latvia:
1) Application submitted to the Bank of Latvia by the Chairman of the Board or Council of the credit institution requesting the license;
2) Agreement on foundation of the credit institution (or the resolution of the respective government or municipality board on foundation of a credit institution);
3) Statutes of the credit institution;
4) Documents (an agreement or reference issued by the owner or manager) confirming the domicile of the credit institution to be registered; the documents must contain a remark of the Cash and Money Turnover Department of the Bank of Latvia certifying the conformity of premises for performing of banking transactions;
5) Reference issued by the settlement group of the Bank of Latvia certifying the paid-in foundation part of the basic capital,
6) References about the professional competence of the would-be bank manager (chairman of the Board, his deputy), (see Annex 2);
7) Reference issued by the state finance inspection on being a registered tax payer or certifying a complete settlement of budget payments;
8) Economic formulation (that is - the plan of economic activity for 2 years) for the establishment of the credit institution;
9) Founders - legal entities submit balance sheets of the last 2 years confirmed by auditing companies; founders - private persons submit income declaration confirmed by finance inspection if the investment exceeds 500 minimum salaries stated by the government; founders - private persons from abroad submit a certificate of the respective servicing bank confirming the solvency of the resident;
10) Founders and council members - as private persons submit the copy of the passport, as legal entities - the copy of the certificate of registration, as non-residents certificate of identification in the original with the translation in Latvian;
11) Permit issued by the Ministry of Economic Reforms if foreign investments exceed 1 000 000 (one million) USA dollars or an equivalent amount in other convertible currency;
12) Power of attorney for duly authorised foreign representatives indicating: name, surname, position, address, identity number;
13) The documents of foreign founders must be legally confirmed by the respective Embassy or in Consulate in Latvia, or in the Republic of Latvia Embassies and Consulates abroad.
In addition to the documents determined in Section 1, the pawnshops are to present the following documents:
a) the Statutes of the pawnshop activities;
b) forms (supplement 3):
- credit order,
- description of possessions pawned against credit to be granted and presented
for storage,
- third copies of the credit orders and storehouse registration cards,
- receipt,
- description of possession passed for realization.
I
In order to obtain a license to perform credit transactions against the security of precious metals, precious stones and articles made of those, "Regulation on accepting for storing and registering of precious metals and articles made of those" is to be submitted in addition to documents enlisted in Sections I and ll.
In order to get a license to establish a branch, subsidiary or representative office of a credit institution registered within the Republic of Latvia, the following documents are to be submitted to the Bank of Latvia:
1) Application submitted to the Bank of Latvia by the Chairman of the Board or Council of the respective credit institution requesting a license to establish a branch, subsidiary or representative office, and indicating the complete domicile and phone number of the branch, subsidiary or representative office;
2) Regulations for the branch, subsidiary or representative office confirmed by the general meeting of the credit institution;
3) Minutes of the general meeting of the credit institution on foundation of the branch, subsidiary or representative office;
4) References about the professional competence of the management of the branch, subsidiary or representative office (see Annex 2);
5) Document certifying the availability of premises which must contain a remark issued by the Cash and Money Turnover Department of the Bank of Latvia on the conformity of premises for performing of banking operations, except of in cases when cash transactions are not performed.
In case the branch, subsidiary or representative office is established abroad, the procedure for establishment is determined both by the regulations provided here and regulations issued by the central bank of the respective country, as well as the legislation of this country.
In order to obtain a license for a foreign bank, branch, subsidiary or representative office of a bank in the Republic of Latvia, the following documents must be submitted to the Bank of Latvia:
1) Application submitted to the Bank of Latvia indicating the name, domicile, telephone, fax and telex of the respective foreign bank;
2) Documents (reference or agreement issued by the owner or manager) certifying the domicile of the credit institution that should be registered; it must contain a remark issued by the Cash and Money Turnover Department of the Bank of Latvia on the conformity of premises to performing of banking transactions;
3) References about the professional competence of the management of the newly stablished credit institution (see Annex 2);
4) Copies of passports of the council members;
5) Power of attorney for the authorised representative of the foreign bank indicating name, surname, position, address and identity number;
6) Documents and their translation in Latvian certifying the status of legal entity of the respective foreign credit institution;
7) Permit issued by a supervising foreign institution to open a branch, subsidiary or representative office in the Republic of Latvia;
8) Statement of affairs for the last two years of the respective foreign credit institution confirmed by auditing company;
9) Duly confirmed Regulation on establishing of branch (subsidiary, representative office) in the original and state language;
10) Plan for economic activity for 2 years (see Annex 1);
11) Legal confirmation of documents by the respective Embassies or Consulates in the Republic of Latvia or representative offices or Embassies abroad.
Terms for considering the applications, reasons for refusal.
Applications for granting a license for operation to a credit institution are to be considered within 30 days following the receipt of the respective documents by the Bank of Latvia.
If the documents provided do not contain sufficient information for an objective decision or the budget obligations have not been settled, the Bank of Latvia informs the claimant within one week requesting additional necessary information or documents.
If the claimant has not submitted the required additional documents or information within 15 days after the receipt of the notification, the application is not considered, and the documents and information provided earlier are returned to the claimant.
After considering of the submitted documents, the Bank of Latvia either grants a license to the new credit institution, or provides a substantiated refusal.
The reasons for refusal may be as follows:
- the documents submitted for registration do not comply with the Republic
of Latvia legislation,
- unsatisfactory financial position of founders may endanger the security
of deposits,
- inconvincing declarations submitted by the founders - private persons,
- professional incompetence of the management or unfavourable references
from former employers,
- inconvincing plan of economic activity,
- premises are not suitable for performing of banking transactions,
- the majority of the board are not citizens or permanent residents of
the Republic of Latvia.
Claimant may submit the documents anew upon eliminating failures causing refusal for obtaining the license.
The decision for granting the license is considered by:
1. The Bank of Latvia Council if the application regards establishment of a foreign bank (branch, subsidiary, representative office).
2. The Bank of Latvia Board for all other applications.
In order to obtain a permit for replacing the chairman or deputy chairman of the Board a licenced credit institution must submit the following documents to the Bank of Latvia:
- the application,
- data about the applicants required in Section I article 6.
For increasing or decreasing of basic capital, and in cases when stock-holders change, the following documents must be submitted to the Bank of Latvia:
- the application,
- a copy of minutes of stock-holders meeting,
- regulations for issue of stock.
If stock-holders change, also the list of stock-holders indicating the
division of stock.
In case of modifications in domicile of the bank, documents certifying the domicile are to be submitted to the Bank of Latvia; they should contain a remark issued by the Cash and Money Turnover Department of the Bank of Latvia certifying the conformity of premises for performing of banking transactions.
The Bank of Latvia is entitled to propose cancellation of the license in case the regulations set forth are not observed.
Documents for all mentioned cases are to be submitted to the Credit Institutions Supervision Department of the Bank of Latvia.
Annex 1.
PLAN OF ECONOMIC ACTIVITY of .....................Bank
for the period of...........
I.General motivation for establishing of the bank.
Il.Summary of objectives of bank activity.
Ill. Sphere of activity (geographic servicing area, branches of national economy, services for private persons).
IV. Credit policy:
1. granting of credits, guarantees;
2. interest rates;
3. term of credit repayment;
4. internal supervision;
5. risk control policy.
V. Strategy of development of the bank within the economic development of the Republic of Latvia and regulating policy of the Bank of Latvia.
Vl. Structure of the bank:
1. organization of work;
2. policy regarding the personnel.
Vll. Planned financial results:
1. balance sheet data;
2. profit, losses;
3. sources for capital and other funds.
Chairman of the Council:
Chairman of the Board:
Annex 2.
REFERENCE
Issued to...........................................
(name, surname)
Position for nomination ............................
Year and place of birth ............................
Domicile............................................
Citizenship ........................................
Education ..........................................
Qualification ......................................
Refresher Courses ..................................
(courses, degree)
incl. abroad .......................................
Banking experience .................................
(name of the bank, period)
Foreign languages (level, read with a dictionary, fluent)
.....................................................
Any culpability .....................................
Former employment with ..............................
(position) *
Supplement:
1. A copy of the certificate of education (University degree) and qualification.
2. A copy of service record.
* A reference from the former employer (preferably - a credit institution) certifying professional competence for the post in the management.
The verity of the information is confirmed by the recipient and the Chairman of the Board.
of September 16, 1993
In order to stabilize banking system in Latvia, the Bank of Latvia Council resolves:
1. Chapter 5, Page 1, of Resolution "On Regulations To Grant Licences To Perform Banking Transactions" of July 15, 1993, is to be expressed as follows:
"The majority of the council members of the credit institution must be the Republic of Latvia citizens permanently residing in Latvia."
2. To amend the reasons for refusing to grant the licence on Page 5:
a) to express the last reason enlisted as follows:
"in case the majority of the council are not the Republic of Latvia citizens permanently residing in Latvia";
b) to extend the mentioned paragraph with the following:
"inconsistency with the Republic of Latvia interests - according to the opinion of the Bank of Latvia Council (or opinion expressed by the Board if agreed on by the Council)."
Einars Repse
President
Bank of Latvia