According to recent legislation announced by the UK, individuals or a holding entity they are a part of that would like to purchase stakes or voting tights in British banking institutions are required to give advance notice to an authorized regulator in the UK, called PRA. Moreover, the regulator has to give a corresponding permission. The violation of this mandatory procedure is considered to be a criminal offense and must be punished by law. As for PRA, it is obliged to approve the projected change in ownership and provide permission to acquire a bank in England with FCA.
The approval for buying a bank in Great Britain is supposed to be granted by PRA within sixty business days. In case the regulator demands additional information about the transaction, the period of approval can be prolonged for additional twenty business days.
Eligibility for purchasing a bank in England
Great Britain has imposed no limitations for foreign ownership of British banking institutions. Unless on certain individuals or states UK, EU or UN enforced their sanctions.
In England banking institutions can be acquired by non-financial legal entities. However, for individuals who hold superior positions or have a substantial influence on British banking institutions it is necessary to receive approval from PRA (applies to for ex. senior managers and staff members of an umbrella company regulating a UK-based banking branch).
It is expected from individuals controlling a banking institution in Great Britain to carry out their functions in accordance with the authority. In order to do so, these supervisors should be collaborative with authorized regulators, make sure their customers are being treated in proper way and their activities as a bank are conforming to regulations listed by PRA and FCA.
Responsibilities of individuals purchasing UK-based banks
It should be taken into consideration by the individuals buying a banking institution in Great Britain that individuals or entities who have control over a bank do not carry responsibility for liabilities of that bank.
Regulatory permissions
In accordance with EU and UK laws, in case a British bank acquisition is related to some competition issues, the procedure has to obtain regulator’s approval. Moreover, purchasing a banking institution, whose stocks are being traded at stock exchanges, can require fulfillment of certain listing rules.
Conditions for a buying permission approval
In case buyers do not fulfill certain conditions, the authorized regulators can decline the permission for buying a UK-based bank. Here are the conditions:
- There are regulators’ standards to meet when it comes to purchaser’s reputation and financial status.
- The purchaser is required to make sure the bank meets the relevant prudential obligations.
- The banking establishment provided by regulators must be ensured by the purchaser.
- The goal of the purchase of a functioning banking institution needs to be proven not to be for money laundering or terrorism financing.
Documents needed for buying a British bank
The regulator’s official website presents the application templates for purchasers to fill out. The buyers are supposed to inform the regulator in detail about themselves and the final beneficiary adding the diagrams, business plans, earning reports, biographical data and others. The business plan of the buyer needs to include:
- Strategic development plan
- Financial report assessment of banking institution for the period of last 3 years
- Evaluation document on how the intended acquisition procedure will influence the bank.
If needed, the regulator can require additional information or documents from buyers. Before obtaining a buying permission of a UK-based bank, an interview with the purchaser can be conducted.
Deadlines to consider
Within the time period of 60 days PRA will approve or decline the buying permission. If the permission was approved, the buyers are provided with 365 days to finalize the acquisition process of a banking institution in Great Britain.
For those planning a banking institution acquisition in the UK, COREDO is here to assist with the application and legally support the purchasers during the whole buying process