License for the activities of banks and local branches of foreign banks
The preparation of initial and final applications for obtaining licenses and permits for the activities of banks and local branches of foreign banks, the collection of necessary documents and the provision of legal assistance in submitting applications is carried out in accordance with the legislation of the Azerbaijan
The role of banking systems in the regulation of a market economy is undeniable. We see this in our daily lives. Banking in Azerbaijan is developing in accordance with international standards and within the framework of competitiveness.
Currently, banks are producing purchasing power. Simply put, banking is money trading, which means buying money at a lower interest rate and getting a higher interest. At the same time, the provisions of the Law of the Republic of Azerbaijan “On Banks” are observed. In accordance with article 9 of the Law of the Republic of Azerbaijan “On banks”, no foreign bank can open branches in the Republic of Azerbaijan without a bank license issued by the appropriate supervisor.
To obtain a banking license
As indicated in the Law of the Republic of Azerbaijan “On Banks”, in order to obtain a banking license and permission, the founders of the bank or persons authorized by the relevant legislation shall submit a written appeal to the supervisory authority. The form and content of the appeal, the documents attached to it must meet the requirements defined by the acts of the regulatory body.
When considering applications for obtaining a banking license and permission, the supervisor can obtain information from the financial, tax and law enforcement authorities about the financial condition, professional activities of the owners of the predominant share in bank capital (if they are a legal entity, then heads of executive bodies) and administrators, about whether they have been prosecuted in the past.
This requirement also applies to persons who subsequently wish to acquire a predominant stake in the bank (if they are a legal entity, then heads of executive bodies), newly appointed administrators and heads of executive bodies of legal entities transformed into a subsidiary of the bank. To this end, financial, tax and law enforcement agencies provide the appropriate authority with the information that it needs.
For consideration of the initial appeal and issuance of a banking license, a state duty is paid in the amount and manner determined by the Law of the Republic of Azerbaijan “On state duty”.
What is a banking license?
A banking license, as specified in the Law on Banks, a special permit issued in the manner determined by this Law, which provides the exclusive right to carry out activities related to attracting deposits of individuals and legal entities or other repayable funds, issuing on its own behalf and on its own credit account, as well as on behalf of customers in the aggregate of transfer and settlement and cash transactions.
Banking licenses and permits are issued indefinitely in writing. Banking licenses and permits can only be used by persons who have received them, and they cannot be transferred to third parties. Banking licenses and permits come into force from the day they are issued by the relevant authority.
If the applicant does not have sufficient organizational and technical training or qualifications, then in the issued banking license and permit, the authority imposes restrictions on the types of activities permitted by banks in Section 32 of the Banking Law.
Licensing of local branches of foreign banks
No foreign bank can open branches in the Azerbaijan Republic without a banking license issued by the authority. Consideration of applications for a banking license to open a local branch of a foreign bank consists of two stages:
1. The initial application for obtaining a banking license and its consideration (first stage)
2. After passing the state registration, the final application for obtaining a banking license and its consideration (second stage)
The following documents are attached to the initial application for opening a branch by a foreign bank in the Azerbaijan Republic:
- The charter of the bank and a copy of the decision of the competent management body on the formation of the branch;
- A list of bank owners with a predominant interest, indicating the shares;
- If the bank is a member of a group of companies, information about this group, including information about persons having a predominant share in other organizations in the group, about the administrators of these persons;
- Information on the number of funds equated to capital allocated by the parent bank to the branch;
- The audited financial report of the bank for at least the last three financial years and the audit report;
Branch location. - In the provision, along with other information related to the activities of the branch, must be indicated
- Types of banking activities, the procedure for controlling the bank and liquidation of the branch;
- A business plan that defines the branch’s commercial strategy, the types of activities envisaged, the organizational structure, including the internal control system, as well as financial forecasts for the first three years of the branch’s operation (balance sheet, profit, and loss statement)
- A document confirming the responsibility taken by the bank for the obligations of the branch;
- The list of administrators proposed for appointment to the branch, as well as copies of documents reflecting information on the professional suitability and experience of each of them (education and work), notarized, a questionnaire filled out by these persons, the size and list of their predominant shares in a bank and other legal entities, a statement of civil perfection signed by the parties with notarized signatures;
- If the administrator is a foreigner, a statement on the presence or absence of criminal prosecution issued by the relevant authorities of the country of which he is a resident and legalized in the manner prescribed by law;
- A document confirming the payment of the state fee for the consideration of the initial appeal.
The consideration of the initial and final applications submitted by foreign banks for a banking license for local branches and the issuance of a banking license is carried out in the manner determined by Article 8 of the Banking Law.
Providing legal services for obtaining licenses for banks and local branches of foreign banks
Given the complex structure of modern banking systems, Legal Store offers you legal services in the banking sector. Thus, our highly qualified lawyers are ready to provide legal assistance in preparing initial and final applications, collecting the necessary documents and applications for obtaining licenses and permits for the activities of banks and local branches, branches and representative offices of banks and foreign banks in accordance with the legislation of the Azerbaijan Republic. In addition, the company provides legal advice on requests from banks to obtain a license and its cancellation.
