The banking sector plays a key role in the sustainable development of the global economy by ensuring the stability of financial systems, protecting consumer interests, and supporting entrepreneurial activity. However, regulatory approaches vary depending on each country’s regional and economic characteristics as well as historical context.
In this article, we will examine the specifics of banking activity in several European countries — Liechtenstein, Belgium, the Netherlands, Norway, and Hungary — as well as in one of Africa’s largest economies, the Republic of South Africa. Particular attention will be given to how local legislation and regulatory bodies contribute to achieving transparency, stability, and trust in the financial sector.
The evolution of the banking system in Liechtenstein
The Principality of Liechtenstein benefits greatly from its highly advantageous location in the heart of Europe, which enables it to hold a prominent position in the financial services market. Banks in the country serve companies from many foreign states.
Key aspects of banking regulation
The mid-1990s marked a turning point for the Principality’s entire banking and financial system. The system underwent profound changes. For example, the Banking Act (1992/108) established the foundations for the operation of banks in Liechtenstein, setting out requirements for their activities and supervision. This legislation was complemented by the Banking Ordinance (1994/022), which refined regulatory norms and standards, enhancing the financial system’s transparency and stability.
In 1996, Liechtenstein adopted the Private International Law Act and amendments to the regulation of individuals and corporations. These developments reflected the Principality’s efforts in the mid-1990s to reform and modernise its legal system, including aspects related to the financial sector.
Additionally, the emergence of new technologies (such as the internet) and Liechtenstein’s accession to the European Economic Area (EEA) had a significant impact on the development and modernisation of the country’s banking sector. Liechtenstein abandoned its principle of information secrecy and data protection barriers, opting instead for unrestricted entry into the European market.
Over time, the prompt resolution of tax matters and cooperation with foreign states became a key priority.
Currently, the country is home to 16 banking institutions, primarily engaged in asset management. The international banking sector, particularly in fintech, has long demonstrated significant potential for growth. LGT Bank AG currently holds a leading position in the country.
Obtaining a licence to conduct banking activities in Liechtenstein is a mandatory requirement. An organisation can provide financial services only after obtaining the required licence. As of today, 16 banks in Liechtenstein hold the necessary licence. Five of these are subsidiaries of financial institutions based in Switzerland, Austria, and Luxembourg.
Regulation in the banking sector
The Currency Treaty with Switzerland, signed in 1980, plays a significant role for financial services companies in Liechtenstein.
Under this agreement, the Swiss franc was designated as the official legal tender of Liechtenstein. Additionally, the treaty outlines specific Swiss legal and administrative provisions that apply within the Principality. The Swiss National Bank has been appointed as the national bank of Liechtenstein, requiring certain financial intermediaries, such as investment firms and banks, to submit reports within specified deadlines to the Swiss National Bank.
However, the oversight and regulation of financial services licensed in Liechtenstein remain the responsibility of the local supervisory authority. The Currency Treaty is a bilateral agreement that is regularly updated and amended as necessary.
What are the advantages of registering financial companies in the Principality?
Like Norway and Iceland, Liechtenstein is a member of the European Economic Area (EEA), which provides access to the four economic freedoms:
- free movement of capital,
- free movement of services,
- free movement of persons,
- free movement of goods.
As a result, all European directives and regulations governing the banking sector, investment funds, undertakings for collective investment in transferable securities (UCITS), asset management, and other types of financial activities are applicable in Liechtenstein. This provides Liechtenstein with a significant advantage, offering a «European passport» to organisations operating in the financial market and their products. Entrepreneurs looking to register their financial company in Liechtenstein have the opportunity to enter the European market without obstacles.
However, Switzerland is not a member of the EEA. This necessitated adapting to the situation, introducing transitional periods, and adopting additional measures. The Vaduz Convention helped address many of these challenges.
Switzerland has partial access to the European financial services market through a series of bilateral agreements with the EU; however, this access is not as comprehensive as that of EEA members, including Liechtenstein. Swiss financial companies must rely on bilateral arrangements and establish subsidiaries in EU countries to fully provide their services.
Significantly earlier, in 1960, the European Free Trade Association (EFTA) Convention was signed, primarily regulating trade in goods. However, it underwent revision in 2001 under the Vaduz Convention. This revision was driven by the need to account for the evolving contractual relationship between Switzerland and the EU. The outcome of the revision was the alignment of treaty obligations between Switzerland and EFTA member states with those towards the EU.
The Vaduz Convention came into effect on 1 June 2002, alongside the implementation of seven bilateral agreements between the EU and Switzerland. The Vaduz Convention expanded and redefined its scope to include trade in services and investments.
How to obtain a financial licence
To engage in certain types of activities within Liechtenstein’s financial market, it is necessary to obtain the appropriate licences. Licences are required for the following areas:
- payment services,
- electronic money operations,
- other types of financial activities.
The most comprehensive authorisation is a banking licence, which allows the holder to carry out all the above-mentioned activities without needing additional permits. However, company employees must possess the relevant education, knowledge, and preferably experience in the field.
Oversight of the banking sector in Belgium
The National Bank of Belgium is the primary regulatory authority overseeing the activities of all banks and financial institutions in the country. It is responsible for regulating organisations involved in lending. In addition, the Financial Services and Markets Authority (FSMA) regulates the activities of financial institutions, including companies listed on the stock exchange, as well as firms providing financial services and products, including intermediaries. The FSMA also handles consumer protection and the collection of relevant information.
Credit companies are subject to prudential supervision, which includes adherence to regulations and laws governing banking activities. These laws are applied alongside the SSM Regulation of 15 October 2013, which governs the division of supervisory functions between the European Central Bank (ECB) and national authorities, including the National Bank of Belgium.
Obtaining a financial licence
The European Central Bank (ECB) has the authority to issue and revoke licences for all credit institutions, regardless of their size. The ECB also evaluates transactions involving the acquisition or transfer of assets between companies. In the supervisory process, the regulator is authorised to apply both European and national legislation.
The Central Bank of the state plays a crucial role in ensuring the stability of the country’s financial system. Its activities focus on overseeing less significant financial institutions and identifying and minimising potential threats to the financial sector. To achieve these objectives, the Central Bank performs the following tasks:
- Identifying and monitoring factors and events that could destabilise the country’s financial system, including crises, liquidity threats, and systemic risks;
- Developing and implementing strategies and recommendations for national regulatory authorities and EU institutions. These recommendations aim to strengthen the financial system’s resilience and prevent crises.
Credit companies are required to coordinate the implementation of new strategic decisions with the supervisory authority. If such initiatives are developed, the companies must notify the regulator, which has two months to review them. During this period, the regulator may reject the proposed changes if it deems that they:
- Contradict the Banking Act; or
- Pose risks to financial stability.
If a credit institution is found to be non-compliant with legislative requirements, the supervisory authority may issue an official notice demanding the correction of the identified violations. A similar warning may be issued if there is reason to believe that the organisation has committed violations within the past year. Typically, a deadline is set within which the credit institution must address the identified violations.
Bank management in Belgium
Before registering a financial company in Belgium, entrepreneurs must carefully plan the structure of the business. For the company to function successfully, the following key elements must be prepared:
- A rational management structure, with a clear delegation of duties and responsibilities among employees;
- A strict accounting and administrative system, along with the establishment of internal control bodies;
- Various methods for identifying and managing risks that may arise in the course of operations;
- An independent internal audit, as well as risk management mechanisms and compliance with legislative norms.
Each financial organisation is required to develop a corporate governance document, which provides detailed information about its internal structure. In addition, the organisation must create four committees:
- Audit committee;
- Risk management committee;
- Appointments committee;
- Remuneration committee.
All the main requirements for managing credit institutions are outlined in a special guide published by the local supervisory authority at the end of 2015 and updated in October 2018.
Capital and liquidity requirements for obtaining a banking licence
The Basel III standards have been integrated into EU legislation through the CRD IV Directive and the CRR Regulation, and are also included in Belgium’s regulatory framework under the Banking Act.
Each credit institution is required to set liquidity and capital requirements based on the specific nature and scope of its operations. To this end, the board of directors develops a long-term management strategy that reflects both current and future capital and liquidity needs.
To apply for a banking licence in Belgium, a credit institution must prepare a capital and liquidity management policy.
This policy must take into account the volume, nature, and specifics of the company’s operations, as well as potential risks. The established indicators are subject to regular assessment and updating as necessary.
If a company’s policy does not align with its risk profile, the regulatory authority may impose additional solvency and liquidity requirements to ensure the stability and reliability of the credit institution’s operations.
The banking sector in the Netherlands
The banking sector in the Netherlands is thriving, with local banks successfully operating both domestically and internationally. Prominent financial institutions in the Netherlands include Rabobank, ABN AMRO, and ING.
Regulatory framework for the banking sector
The regulation of banking activities in the Netherlands focuses on two key aspects:
- systemic and prudential supervision;
- oversight of financial activities conducted by the organisation.
Systemic and prudential supervision in the Netherlands is shared between the European Central Bank (ECB) and the Dutch Central Bank (DCB).
The regulation of the financial services market is overseen by the Netherlands Authority for the Financial Markets (AFM). The primary responsibilities of the AFM include:
- ensuring transparency and accessibility of information for financial market participants;
- promoting fair and clear relationships between market participants;
- supervising the activities of companies providing financial services to clients.
Key regulatory framework
The principal legislative framework governing financial institutions in the Netherlands is the Financial Markets Supervision Act (FMSA), enacted in 2007, along with related regulations and guidelines.
In 2016, a decision was made to revise the FMSA to align it with the modern realities of Europe. However, in 2019, the Dutch Minister of Finance decided to halt the revision process due to its complexity and significant financial costs, deeming it impractical at that time. As a result, the issuance of banking licences continues to be based on the provisions of the 2007 FMSA without significant changes.
In most cases, Dutch banks are subject to EU-level regulatory standards. A review of the FMSA reveals that many of its provisions are rooted in the implementation of European directives. With the modern drive for the integration of a unified market, numerous regulatory requirements are now enforced through European regulations.
Key among these are the Capital Requirements Directive (CRD IV) and the Capital Requirements Regulation (CRR). On 9 July 2024, the updated Capital Requirements Regulation (CRR3) also came into effect.
Bank licence application process
Any bank in the Netherlands must hold a licence to carry out its activities.
All applications are processed by the Dutch Central Bank (DNB) and the European Central Bank (ECB). Strict requirements are set during the application review process, and compliance is monitored:
- Management qualifications: the bank’s policies must be overseen by individuals who are suitably qualified to conduct banking activities in the Netherlands. These same qualifications apply to all members of the management team. Members of the supervisory board or its equivalent must meet the qualification requirements set by the regulatory authorities.
- Business practices: the bank must ensure sound business practices, including client onboarding and effective risk management.
- Executives: at least two individuals must be responsible for the daily operations of the bank and must perform their duties within the Netherlands.
- Supervisory board composition: the supervisory board must include at least three members.
- Control structure: the internal control system must be transparent and clear to the regulatory authorities.
- Financial requirements: the bank must comply with solvency, liquidity, and minimum capital adequacy requirements (regulated under international standards, such as Basel III and relevant European directives).
These requirements must be adhered to even after the bank has obtained its licence in the Netherlands. Failure to comply with these standards may result in the revocation of the licence. Only organisations that strictly comply with all regulatory provisions can obtain a Dutch banking licence. The Netherlands actively supports innovation in the financial sector, and since 2017, the Dutch Central Bank (DNB) has used an individual assessment approach when reviewing applications for new financial products.
New changes in obtaining a financial licence
Since the beginning of 2019, the processing time for applications for a banking licence has been extended. As of 2025, the time required to issue a licence for conducting financial activities ranges from 6 to 9 months.
Additionally, a new requirement has been introduced: applicants must provide a document detailing the procedure for ceasing banking activities. This document must include a clear action plan in case the applicant decides to cease operations, aiming to minimise the impact on clients and the financial system.
Moreover, changes have been made to the capital requirements for banks and their operations. If a banking institution in the Netherlands decides to expand its activities and start offering investment services, it must apply for an extended licence. In this case, the regulator imposes additional requirements, as investment activities are considered new for the company.
For most payment and financial services, a licensed bank does not need to obtain an additional licence. These services include:
- Consumer lending
- Providing advice on financial products (excluding financial instruments)
- Acting as an intermediary for such products.
However, if the bank decides to offer other services, such as those related to investment instruments or asset management, it will need to obtain the relevant authorisation.
Banking regulation in Norway
The financial sector in Norway includes 97 registered banking institutions, of which 82 are savings banks and the rest are commercial banks. It is worth noting that their number has significantly decreased over the past decade. Additionally, 40 credit companies are operating in the country, including branches of foreign banks, although not all of them offer a full range of services. The primary activity of these institutions is equipment financing.
The two largest and most influential commercial banks in Norway are DNB Bank ASA and Nordea Bank ABP, along with two savings bank groups: Eika Group and SpareBank 1 Group.
Foreign banks operate actively in Norway through branches, playing a key role in industries such as oil, maritime, and shipping.
How is banking regulated in Norway?
Norway is not a member of the European Union, but it has an agreement with the member states of the European Economic Area (EEA) and aligns with the adoption of relevant European financial directives. This agreement allows companies from EEA countries, as well as Norwegian entrepreneurs, to provide financial services within their jurisdiction, adhering to standards and requirements similar to those in Eurozone countries.
To accept deposits and issue loans, a bank in Norway must hold a Norwegian license, as required by national law. Banks operate under the “Financial Enterprises and Financial Groups Act,” adopted in 2015. This law mandates compliance with several European directives and regulations, including:
- Capital Requirements Directive IV (CRD IV);
- Bank Recovery and Resolution Directive (BRRD);
- Capital Requirements Regulation (CRR).
The Financial Enterprises Act regulates the activities of various organizations and structures, including:
- Companies providing credit services;
- Financial institutions;
- Payment institutions;
- Holding companies within financial groups;
- E-money institutions;
- Pension and insurance funds.
For banking companies involved with investment projects and funds in Norway, two key pieces of legislation are in place: the Alternative Investment Fund Act, adopted in 2014, and the Investment Fund Act, adopted in 2011. These laws regulate the operations of funds, including their structure and management requirements.
Since October 2018, Norway has implemented the Anti-Money Laundering (AML/CFT) Act, making it mandatory for Norwegian legislation to comply with the European Union’s Directive No. 4 on Anti-Money Laundering. This is crucial information for business owners intending to obtain a banking license in Norway.
Cryptocurrency transactions are permitted in Norway; however, an important requirement is that all such transactions must be registered and reported to the Financial Supervisory Authority of Norway (FSAN). Companies providing cryptocurrency services are required to obtain the appropriate license. To do so, they must notify the FSAN, which is responsible for overseeing and regulating cryptocurrency activities in the country.
Additionally, there is another important piece of legislation governing the activities of all financial organizations in Norway — the Financial Supervisory Act. The primary authority responsible for financial supervision is the FSAN. Its main functions include:
- Monitoring and overseeing the activities of financial institutions;
- Issuing licenses to all financial institutions operating in Norway;
- Regulatory development;
- Information management.
Acceptance of deposit funds
In Norway, the acceptance of deposit funds from the public is only permitted for financial companies holding a Norwegian banking license. Credit institutions without a banking license may accept repayable funds from the public, but not deposits, through the issuance of bonds or other similar securities.
Credit companies from EEA countries operating in Norway with a license from their home state are allowed to accept deposits only if this is explicitly stated in their license.
Issuance of loans
In Norway, the issuance of loans is a regulated activity that requires obtaining the appropriate license from the authorities. There is specific legislation in Norway that allows individuals to engage in crowdlending (peer-to-peer lending). Financial companies may not hold a banking license but can obtain a non-bank lending institution license to offer loans. One example of such companies are mortgage lending institutions that operate in the covered bond market. These organizations typically have savings groups, and they acquire their loan portfolios from banks.
Crowdlending is a form of lending where private companies can directly offer loans without the involvement of banks. Experts from our company, COREDO, have thoroughly researched this method and all the necessary legislation regulating crowdlending. If you are interested in the regulation of crowdlending, we are ready to provide you with consultation on all related matters.
Investment companies can also offer loans, but they must obtain the appropriate license.
Currency exchange
Foreign currency trading is permitted for banks, various payment institutions, and financial companies, provided they obtain a special licence issued by the regulator to conduct such activities.
Payment services
In Norway, registering a company to provide payment services and commencing operations is only possible with the appropriate licence.
The guiding document for organisations offering payment services (PSP) is the Payment Services Directive, which was incorporated into Norwegian legislation in 2010.
In 2018, Norway adopted the Payment Services and Electronic Money Act, which partially aligned national legislation with the requirements of the European PSD2 directive. This law regulates the activities of payment service providers and electronic money institutions, ensuring the safety and transparency of payment transactions.
PSD2 was fully implemented into Norwegian legislation following the enactment of the new Finance Agreements Act on January 1, 2023.
Investment proposals
Investment services are permitted in Norway for banks and limited liability companies, provided they hold the appropriate licenсe. This licenсe can be obtained directly by the bank or through its subsidiaries. Foreign companies holding a passport may also provide investment services within Norway.
Bank structures in Norway
Banks in Norway are organised under two primary legal structures:
- Savings banks – these can raise capital through the issuance of equity certificates. Unlike shares, these securities do not grant their holders ownership rights to the bank’s charter capital.
- Commercial banks – these are registered as public or private limited liability companies (LLCs). According to the Financial Institutions Act, all commercial banks established after January 1, 2016, must be public companies. However, if a bank operates as a subsidiary within a financial group, it can be organised as a private entity.
The minimum share capital requirement for all banks is the same – it must be at least €5,000,000.
Branches and cross-border services
According to EU and EEA directives, foreign banks registered in countries within the European Economic Area (EEA) are allowed to establish branches in Norway.
The primary regulatory authority for such banks is the Norwegian regulator, which oversees the activities of these branches on par with the bank’s internal structures. The main legislative act governing the operations of foreign banks in Norway is the Financial Institutions Act. These banks are also subject to the supervision of the Financial Supervisory Authority of Norway (FSAN).
Foreign banks operating in Norway can provide cross-border services under EU and EEA regulations.
However, banks registered outside the EEA are required to obtain a license in Norway by establishing a branch.
Regulation of banks in Hungary
The financial market in Hungary is overseen by the country’s main financial regulator, the Hungarian National Bank (MNB). The MNB is also responsible for managing systemic risks in the financial sector, protecting consumer rights, and supervising the capital and insurance markets.
The key aspects of banking regulation in Hungary include:
- Governmental control;
- Deposit insurance;
- Ensuring the fulfillment of risk and capital management requirements;
- Guaranteeing monetary and fiscal stability;
- Safeguarding protection of consumer rights and banking secrets.
If a banking institution violates the regulation, the MNB is entitled to:
- Make a statement about a violation;
- Require a bank to obey banking and prudential regulations;
- Request an urgent report from a bank;
- Demand the preparation and application of an action plan.
If a violation is considered serious, the MNB has the authority to appoint a supervisory commissioner to oversee the operations of a bank or its subsidiaries. This ensures compliance with regulations and facilitates the prompt resolution of any violations.
Governmental takeovers
When a systematic crisis takes place in Hungary’s financial sector, the regulator is required to notify the Minister for Monetary Regulation. The Minister decides on the appropriate course of action, which could involve increasing the capital of a financial institution or temporarily nationalising its shares. During nationalisation, the state gains the right to take control of financial institutions registered in Hungary.
Bankruptcy cases
When a bank is on the verge of bankruptcy, a supervisory commissioner is appointed to assume the rights and responsibilities of the Board of Directors. During the commissioner’s tenure, Board members are not permitted to make decisions. The task for banking institutions then is to invent a recovery plan that always depends on several factors, such as the seriousness of risks connected to their financial services and business model.
Capital adequacy requirements
To establish a bank in Hungary, a minimum capital of 2 billion Hungarian forints (approximately 6.3 million US dollars) is required. The same rules apply to foreign subsidiaries. All banking institutions must maintain the minimum level of capital to meet the requirements for solvency, liquidity, and risk mitigation related to banking activities.
In addition, banks are required to allocate 10% of their annual profit to a general reserve to cover operational losses. Failure to comply with capital adequacy requirements results in penalties.
Additionally, there are instances when the Board of Directors must notify the MNB within 48 hours about:
- Changes in the bank’s share capital;
- Suspension or cessation of the bank’s activities.
Insolvency
Before initiating the bankruptcy process, the MNB typically requires urgent measures to be taken, including:
- Suspension of certain transactions;
- Preparation of a schedule for the capital structure calculation;
- Setting a maximum interest rate;
- Holding a general meeting of shareholders;
- Cancellation of consent for the appointment of personnel;
- Compelling bank owners to carry out the required actions.
In the event of insolvency, the Board of Directors must immediately notify the MNB in writing. Once it is done, a bank or the MNB starts a liquidation process. If the court orders the liquidation of the bank, creditors are given a two-month period to submit their claims.
Regulation of banking activities in South Africa
The regulation of banking activities in South Africa is based on a strategic document issued by the country’s National Treasury, titled “A Safer Financial Sector to Serve South Africa Better.” Responsibility for protecting the national currency and ensuring sustainable economic growth is designated to one of the main financial regulators, the South African Reserve Bank (SARB).
In 2018, South Africa introduced a new law — the Financial Sector Regulation Act (FSR). This law became the foundation for the regulatory structure of the financial sector and is aimed at protecting clients, preventing financial crimes, and increasing public trust in the country’s financial system.
Its main objectives include:
- Protecting clients of financial institutions and ensuring fair treatment;
- Preventing financial crimes;
- Transforming the country’s financial system to enhance its efficiency;
- Increasing public trust in the financial system;
- Ensuring the safety and reliability of financial institutions.
The banking sector in South Africa is regulated and supervised based on the following legislative acts:
- Companies Act
- Banks Act
- Mutual Banks Act
- Co-operative Banks Act
- National Payment System Act
Entrepreneurs planning to register a banking company in South Africa should note that banks are regulated by the following institutions:
- FIC — Financial Intelligence Centre
- BSD — Bank Supervision Department
- NCR — National Credit Regulator
Additionally, local authorities have introduced new requirements in addition to the Banks Act. These aim to ensure compliance with BCBS (Basel Committee on Banking Supervision) standards. These requirements include:
- Limited liquidity claims
- Liquidity disclosure
- Liquidity review
- Intraday liquidity management
- Capital disclosure
- Public disclosure related to the leverage ratio.
For entrepreneurs planning to start financial activities in South Africa, it is important to consider all mandatory conditions for compliance with local standards established for banks and other key financial market participants.
These requirements relate not only to the observance of regulatory acts but also to ensuring financial stability and operational security.
This article provides an overview of the key principles and regulations governing the banking sector in countries such as Liechtenstein, Belgium, the Netherlands, Norway, Hungary and South Africa. However, it is important to note that for a full understanding of the specifics of doing business in each of these countries, it is advisable to consult with specialists who have detailed knowledge of the relevant laws and practices.
If you have any questions or need additional consultations on doing business in one of the above-mentioned countries, you can reach out to the specialists at COREDO. The COREDO team is always ready to help clarify legal and financial aspects and provide detailed assistance on any matters.
While PSD2 has brought notable improvements, it has faced particular challenges that have required updating the regulatory framework to adapt to the rapidly changing payment landscape.
The implementation of PSD3 in the Member States of the European Union will follow a structured timetable similar to previous directives. The European Commission will publish the final text of PSD3, specifying its provisions and requirements. EU member states will have a set period to transpose the Directive into national legislation.
According to the AML Act, a virtual asset, in its broad sense, covers all types of crypto-assets described above, excluding tokens exhibiting characteristics of securities and qualifying as investment instruments under the Investment Company and Investment Funds Act.
Notably, a company holding a VASP licence in the Czech Republic can offer its services to clients from other countries. However, if such services are provided in another European Union country (remotely, without establishing a branch), it can only be done temporarily and irregularly.
Through our efforts, we achieved the following:
The first myth is that many believe the Czech National Bank issues the licence for crypto-business.