Provision of the Czech National Bank No. 24/1994 Coll. of Laws
establishing the prerequisites of the application for the granting of a license to operate as a bank, as well as establishing the minimum amount of basic capital, being a condition for the granting of the license and the prerequisites of the application for a license to operate as a bank for the branch office of a foreign bank.
The Czech National Bank stipulates, pursuant to Sections 4 and 5 of Act No. 21/1992 of the Collection of Laws on banks the following:
Establishment of the Bank
Article 1
The minimum amount of basic capital representing a condition for being granted a license for operating as a bank is CZK 500.000.000, deposited in an account opened with the Czech National Bank for this purpose, or possibly, with the consent of the Czech National Bank, with some other bank operating within the Czech Republic.
Article 2
(1) An application for a license to operate as a bank submitted to the Czech National Bank must contain the following:
a) justification of the application emphasizing the grounds of the
establishment of a new bank with the specification of the assumed preconditions
for the bank's activities and its anticipated profitability
b) the bank's draft articles incorporating, in addition to the stipulated
prerequisites (Article 173 of Act 513/1991 of the Collection of Laws, Commercial
Code in the wording of subsequent prescriptions, and Article 9, para. 1,
Act 21/1992 of the Collection of Laws, in the wording of subsequent prescriptions),
the method of exchanging bearer shares for registered shares or for non
voting shares,
c) information on the bank founders if they are natural persons,
d) information on the bank founders if they are juridical persons,
e) information on the amount and structure of the basic capital of the
bank being established, the possibility of obtaining additional capital
from the bank founders or enlargement of the capital by some other means,
f) a survey of planned activities, including a chronological schedule and
commencement of these activities with specifications as to their anticipated
volume
g) a three year business plan for those activities intended under Article
2, para. f, of this provision
h) a strategy for the development of individual banking activities with
the indication how these shall be reflected in the bank's balance sheet
and profit and loss account,
i) information on the bank's organisation,
j) the names of at least three proposed bank officials responsible for
the bank's management, having at least three years of practice in a leading
position in a bank, the posts for which they are proposed, their curriculum
vitae, qualification for the position, a statement from the crime register
in the case of citizens of the Czech Republic, testimony of clean records
in the case of other citizens, posts held in other company bodies, familial
relations with employees of other banks or financial institutions, participation
in professional training and secondments directed towards the management
area for which they are being considered with the attachment of the results
and assessment of these trainings and secondments, a survey of activities
performed to date, including the length of practice in financing in a leading
post at a comparable level of decision making and the regulatory rights
and competencies connected with the proposed post; as part of the curriculum
vitae are reliable references for proposed employees from at least two
explicitly stated independent sources from the banking area,
k) the organisation and targets of the internal control system, the position
and tasks of the internal control department, the position and tasks of
the internal audit department and the measures to ensure an independent
and objective operation of these bank sections.
(2) Information on the founders of the bank, if they are natural persons, must contain the following:
a) name and surname,
b) date and place of birth,
c) nationality, citizenship,
d) permanent residence address
e) curriculum vitae emphasizing past employment,
f) a statement from the crime register in the case of citizens of the Czech
Republic and confirmation of clean records in the case of other founders,
g) a survey of the property and financial situation of the founders and
an officially verified source of the funds being invested in the bank,
the volume and the form of capital being invested in the bank
h) the participation of the bank founders particularly in commercial companies
or cooperatives where the share of the capital by the founders exceeds
10% or are represented in their management or statutory bodies, possibly
in other forms of entrepreneurial activities,
i) a survey of the banks with which the founders keep accounts,
j) the familial relations with persons employed, at the time when the application
is being submitted, in financial institutions or institutions of a similar
type.
(3) Information on the bank founders, if they are juridical persons, must contain the following:
a) a statement from the commercial register or copy of the founding
document verified by a Notary Public, possibly other documents documenting
its origin, place and date of its establishment, the activity with which
it deals, a survey of the natural or juridical person's whose share of
the juridical person's capital exceeds 10%,
b) in the case of a joint-stock company, the lowest and the highest price
of company shares for at least the last five years, including the last
evaluation; should the company have existed for a shorter period than five
years, then from the beginning of its existence,
c) documents on the results of the company performance for the last three
years (at least the balance sheet and profit and loss account) including
auditor reports, possibly reports by the Supervisory Board and performance
reports submitted to the General Shareholders' Meeting; if the accounting
system of the state wherein the person founding the bank is seated is different
from the system employed in the Czech Republic, an explanation of these
differences,
d) information on the source, scope and form of the capital being invested
in the bank; the continuous ability of the company to create sources for
securing other deposits to the basic capital of the bank being established
must unequivocally ensue from this information; the balance sheet, profit
and loss account, documents on disposable means or founder's state of property
(e.g. up-to-date current account statement) are understood to be within
the information concerning the origin of the source of capital being invested
in the bank,
e) basic information on commercial companies and cooperatives in which
the founders participate with their capital and this share represents more
than 10% of the basic capital of these companies or cooperatives, possibly
other legal forms of entrepreneurial activities,
f) a survey of the banks with which the founders keep their accounts.
(4) The commercial plan of the bank, broken down into quarters, in the first year of its activities contains:
a) the balance sheet in a breakdown specified for banks by the Ministry
of Finance
b) the profit and loss account in a breakdown specified for banks by the
Ministry of Finance.
(5) The strategy for development of individual banking activities contains the following:
a) the intentions of the bank in granting credits and obtaining deposits,
especially from the point of view of customer nature (natural or juridical
persons, small, medium and large companies, etc.) on which the bank shall
concentrate, or, if need be, the sector of the economy, territory and further,
the type and range of credits and deposits,
b) the volume of the funds the bank intends to obtain from banks or other
financial institutions in the Czech Republic or abroad,
c) the intentions of the bank in trading in domestic and foreign securities
(investment in securities on its own account, trading on its own account
and on account of the customer); bank participation in share issues and
granting of related services
d) the intention of the bank in the development of domestic and foreign
payment systems and in developing further operational services,
e) the intentions of the bank in trading in FX,
f) the intentions of the bank in granting guarantees,
g) the internal measures of the bank oriented towards the limitation of
the risk exposure of assets or liabilities towards the customer, possibly
towards a mutually connected group of customers.
(6) Information on the bank's organisation contains particularly data on:
a) the structure of the bank and its headquarters,
b) the activities of the bank's specific departments and organisational
units, number of employees, division of competencies among officials of
the bank being established,
c) the branch offices the bank intends to establish, their number and incorporation
into the organisational structure of the bank and the form of their management
and supervision,
d) the organisation and management of the bank's information system, especially
the creation, processing, storage, transfer and protection of data and
information and methodological and technical means and software used in
the bank's information system, ) the organisation of trade with FX, the
organisation of the decision-making process in the bank,
e) the organisation of the management of the bank's liquidity,
h) the bank buildings and equipment, if ownership relations towards these
properties are available.
Article 3
Establishment of a Foreign Bank's Branch Office
( 1) The application of a foreign bank which intends to establish its branch office in the Czech Republic must contain the following prerequisites and documents:
a) the documents submitted by the statutory body of the foreign bank,
b) information on the foreign bank establishing the branch office in the
Czech Republic,
c) a survey of the activities the branch office intends to execute, including
a chronological schedule of the commencement of these activities with specifications
as to their anticipated volume,
d) a commercial plan for the first three years of the branch office's activities
intended under Article 3, para. c, of this provision,
e) the intentions of the branch office as to the development of specific
banking activities indicating how these shall be reflected in the bank'
s balance sheet and the profit and loss account,
f) information on the branch office organisation,
g) the names of the officials of the branch office responsible for its
management, having at least three years of practice in a leading post in
a bank for which they are being proposed, their curriculum vitae, qualifications
for the position which they hold following their previous leading post
in financing, confirmation of their clean records, posts in other companies
familial relations with officials or members of the statutory bodies of
other banks or financial institutions at home or abroad, as part of their
curriculum vitae are reliable references concerning proposed employees
from at least two explicitly specified independent banking sources,
h) the organisation and position of internal control system applied within
the framework of the bank and the branch office, tasks of the internal
control department, the position of the internal audit department and the
measures to ensure an independent and objective operation of these sections
of the bank,
i) the documents enclosed in the application's attachment.
(2) Documents submitted by the statutory body of the foreign bank contain:
a) justification of the intention to establish a foreign bank's branch
office (hereinafter "branch office") in the Czech Republic emphasising
the grounds of the branch office establishment,
b) the decision of an appropriate bank body on the intention to establish
the bank's branch office in the Czech Republic,
c) a binding proclamation by the statutory body of the foreign bank as
to the assumption of the responsibility for the settlement of all assets
and liabilities of the branch office or, when required by the Czech National
Bank, a binding proclamation by this body as to the transfer of the funds
of the foreign bank to the Czech Republic for the purpose of settlement
of all branch office liabilities as of the date and under the conditions
set forth by the Czech National Bank, The Czech National Bank may require
the transfer of the funds prior to the commencement of the foreign bank's
branch office activities, up to the amount of the funds under Article 1,
d) the commitment to regularly submit to the Banking Supervision Department
of the Czech National Bank the following:
1. the bank's annual report,
2. an up-to-date half-yearly calculation of the establishing bank's capital
adequacy verified by the banking supervision of the state wherein the bank
has its seat,
e) a statement by the banking supervision of the state wherein the foreign
bank has its seat (hereinafter "bank"):
1. on the establishment and existence of the bank in compliance with
the Laws of the state wherein the bank has its seat,
2. on the application of banking supervision in branch offices of the foreign
banks, including the branch office in the Czech Republic,
3. on providing early information to the Banking Supervision Department
of the Czech National Bank about anticipated supervision of the activities
of the branch office in the Czech Republic in order to co-ordinate a joint
process with the Banking Supervision Department of the Czech National Bank
during the execution of a supervision in the branch office,
f) a commitment by the banking supervision department of the state wherein
the foreign bank has its seat to inform the Banking Supervision Department
of the Czech National Bank about changes in:
1. the capital adequacy and liquidity of the bank and other facts which
might lead to the deterioration of the bank's ability and its branch office
abroad to meet their commitments,
2. the rules on prudential operating of the bank and other conditions affecting
the activity of the bank and its branch office abroad in a significant
way,
3. the conception and ensurance of bank secrecy in effect in the state
wherein the foreign bank has its seat, the relationship of bank secrecy
towards branch offices of the bank abroad,
4. the system of deposit insurance in the state wherein the bank has its
seat.
(3) Information about a foreign bank establishing a branch office in the Czech Republic contains the following:
a) the founding document (a statement from the commercial register),
which must contain the name of the bank and its legal form, address, place
and date of foundation, the activity it effects, natural and juridical
persons whose share of the basic capital of the bank exceeds 10%,
b) in the case of joint stock companies the lowest and highest prices of
the bank's shares for the last five years, including an indication of the
present share price,
c) documents on bank performance for the last three years, including auditor
reports, possibly reports by the Supervisory Board and reports on performance
submitted to the General Shareholders' Meeting; if the accounting system
of the state wherein the company founding the bank is seated is different
from the system employed in the Czech Republic, an explanation of these
differences.
(4) The commercial plan of the branch office, broken down into quarters in the first year of its activities contains:
a) the balance sheet in a breakdown specified for banks by the Ministry
of Finance,
b) the profit and loss account in a breakdown specified for banks by the
Ministry of Finance.
(5) The intentions of the branch office as to the development of specific banking activities contain the following:
a) the amount and form of the funds being granted to the branch office
by the establishing bank,
b) the intentions of the branch office in granting credits and obtaining
deposits with characteristics of the types of customers on which the bank
shall concentrate (natural or juridical persons, small, medium, large companies,
etc.), if need be, the sector of the economy, territory and further, the
type and range of credits and deposits,
c) the volume of funds the branch office intends to acquire from banks
or other institutions in the Czech Republic or abroad,
d) the intentions of the branch office in trading in domestic or foreign
securities (investment in securities on its own account, trading on its
own account and on account of the customer), branch office participation
in share issues and provision of related services,
e) the intention of the branch office in the development of domestic and
foreign payment systems and other operational services,
f) the intentions of the branch office in trading with FX,
g) the intentions of the branch office in granting guarantees,
h) internal measures of the branch office oriented towards the limitation
of the credit risk exposure of assets and liabilities towards the customer
possibly towards a mutually connected group of customers.
(6) Information on the branch office organisation, in particular, on the following:
a) the headquarters of the branch office with a specification of the
relations between the branch office and the parent bank from the point
of view of authority and responsibility during decisions as to banking
operations and their performance,
b) activities of individual sections and organisational units of the branch
office, the number of employees, division of competencies among officials
of the bank being established,
c) organisational units the branch office intends to establish, their number
and incorporating into the organisational structure of the bank and the
method of their management,
d) organisation and management of the branch office information system,
in particular, on creating, processing, storage, transfer and protection
of data and information and on methodological and technical means and software
used in the branch office information system,
e) organisation of trading in FX,
f) organisation of the decision-making process,
g) the bank buildings and equipment, if they are already available, and
the ownership relations towards these properties.
(7) The bank submits as an application's enclosure the following:
a) the rules on prudential bank operation applied in the state wherein
the bank is seated towards the branch office abroad,
b) laws specifying the activity and responsibility of the banking supervision
bodies, regulatory processes applied towards banks from the level of the
banking supervision of the state wherein the bank is seated, possibly other
legal norms adjusting or affecting bank activities,
c) legal norms regulating the deposit insurance system in the state wherein
the founding bank has its seat with the statement if it relates also to
the branch office in the Czech Republic.
General, Temporary and Closing Provisions
Article 4
In addition to the data stated in Articles 2 and 3, the CNB is authorised to require, in writing, from the submitters of the application for the establishment of a bank or a foreign bank's branch office, other documents or information in order to supplement the application.
Article 5
(1) All documents shall be submitted in two copies. Documents in a foreign language must be provided with a verified translation into the Czech language.
(2) The document granting full powers to the authorised employees to represent and act on behalf of the founders in negotiations with the Czech National Bank in terms of the application for a banking license or a license to operate as a branch office of the foreign bank, and a declaration from the employees authorised by the founders to act in the negotiations concerning the granting of the license or the license to act as a branch office of the foreign bank, that all submitted documents and information are up-to-date, complete and true must be enclosed with the application for a license to operate as a bank.
Article 6
The provision of the State Bank of Czechoslovakia of February 15, 1992 which establishes the prerequisites for the application for the granting of a license to operate as a bank, as well as the minimum amount of basic capital being a condition for the granting of a license and the prerequisites for the application for granting of a license to operate as a bank to the branch office of the foreign bank, as well as minimum amount of the provided capital, being a condition for the granting of the license, is being cancelled.
Article 7
This provision comes into force on the date of its announcement.
Josef Tosovsky
Governor