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Banking Law in Malta

Banking Law in Malta

Updated on Wednesday 06th July 2016

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Banking-Law-in-MaltaThe main law governing financial activities in Malta is the Banking Act, also known as Chapter 371 in the Civil Law first released in 1970. The law was last amended in 1994 when improved conditions for banking institutions were enabled. Malta also adopted several EU Directives related to financial activities which enable banks from EU countries to obtain passporting rights and provide their services here.

The agency supervising Maltese banks’ activities is the Malta Financial Services Authority (MFSA). The same authority verifies the activities carried out by subsidiaries or branch offices of foreign banks in Malta.

Provisions of the Maltese Banking Law

The Banking Law in Malta is divided in 10 parts which provide for the obligations of financial institutions. The first part establishes the rights and requirements the Minister of Finance must fulfill. The other parts refer to:

  • -          the supervisory activities of the MFSA;
  • -          licensing of banking institutions in Malta;
  • -          the opening of branch and representative offices of foreign banks;
  • -          the governance of financial institutions;
  • -          capital requirements;
  • -          the activities that cannot be carried out by banks in Malta.

Our lawyers in Malta can offer detailed information about the content of the Banking Act.

How to start a banking institution in Malta

According to the Maltese Banking Law, the minimum share capital to set up a financial institution in this country is 5,000,000 euros. These must be the company’s own capital and cannot be altered at any time. The first step to open a bank is to register a company with the Maltese Trade Register and submit the whole share capital. The second step is filing for the banking license with the MFSA. In order to grant the license, the MFSA will verify if the shareholders meet the “fit and proper” criteria as established by the Banking Law. The license is issued after 6 months from submitting the documents. After two months from the opening, the bank may set up its first branch or representative office.

Among the activities a Maltese bank can undertake are:

  • -          offering credits and opening bank accounts;
  • -          investing in equity;
  • -          buying immovable properties.

For complete information about obtaining a banking license, you can contact our Maltese law firm.

 

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