Licensing

Only joint-stock companies that have been granted a banking licence by the Czech National Bank in compliance with the Act on Banks are permitted to operate in the Czech Republic as a bank. The first step towards acquiring a licence is to submit an application containing the essential information laid down in a CNB Decree.

The application must be made in writing. In addition to basic information on the applicant, it must contain, among other things, the bank's strategic plan, a programme of operations and an analysis of the market on which the bank intends to operate. A number of background documents for the licensing procedure also have to be submitted.

The licensing procedure lasts six months, unless interrupted by a request for additional information, and includes an assessment of:
      the suitability of the bank`s main shareholders with respect to their financial strength,
      the competence and moral fitness of the persons nominated for positions in the bank´s statutory and managerial bodies,
      the technical and organisational prerequisites for pursuing the proposed activities,
      whether the economic calculations regarding the bank`s future liquidity and profitability are realistic.

The minimum capital needed to establish a bank is CZK 500 million and must be deposited in pecuniary form on an account agreed upon in advance.

Branches of foreign bank branches may also carry on business in the Czech Republic. To do so, they too need a banking licence. The licensing procedure is analogous to that for banks. In this case, though, the opinion of the supervisory authority of the country in which the foreign bank has its headquarters is also required. CNB Banking Supervision works in co-operation with this foreign regulator when assessing the application. Similar co-operation takes place during the granting of a banking licence to a foreign bank´s subsidiary (a joint-stock company under Czech law).

Licences are issued for an indefinite period. They contain a list of the activities that the bank is permitted to carry on and, in some cases, the conditions that the bank must meet prior to commencing a particular permitted activity or adhere to when carrying on that activity. Some of the activities listed in the licence may be conditional on the granting of special authorisation (e.g. provision of investment services). An on-site inspection takes place at the bank before it opens for business to verify whether it is ready to do so.