I mentioned in the past article the benefits of obtaining an International Bank License in St. Lucia. In this post I’ll cover the steps and procedures you must follow to set up an international bank in St. Lucia.
Steps and procedures you must follow to negotiate an international banking license in St. Lucia are very similar to the ones in other Caribbean countries, but with a few differences. It is important to have everything in order before you begin your application for an international bank license on St. Lucia.
St. Lucia is one of the best jurisdictions in the world for financial asset management and for a FinTech international bank. This is because regulators and the government on the island are experienced in FinTech and understand the business model, something you won’t find on all the islands. St. Lucia is welcoming to FinTech banks.
Entrepreneurs who apply for an international banking license on St. Lucia have to provide with several documents and complete a list of steps to obtain a license, such as:
– All assets recorded on the balance sheet of a financial institution as well as their off-balance sheet exposures are assigned to broad risk categories
– The total of the risk-adjusted assets, both on and off-balance sheet, is compared to the level of an institution’s capital
– The qualifying capital comprises Tier I or Core Capital and Tier II or Supplementary Capital.
– The ratio of capital (Tier I and Tier II) to risk-weighted assets should be a minimum of 8% of which the core element (Tier I) should be at least 4%. Minimum paid-in capital begins at $1 million.
Just as there are capital requirements and due diligence involving the proof of said capital, there are also corporate management requirements that you must follow. The way that you establish your corporation needs to be in a certain way to appease the corresponding authorities.
Every person associated with the application or named in the business plan must go through the due diligence process. This includes ALL officers, directors, shareholders, investors, and key persons.
– Particulars of the applicant (in some cases this will be the parent company of the proposed bank).
– Particulars of the shareholders and directors of the applicant/parent company. In the case of a public company quoted on a recognized stock exchange, this will not normally be necessary.
– Particulars of the company to be incorporated, (the proposed company), i.e. the name, address, nature of the business, the names of the proposed directors.
– A due diligence questionnaire to be completed by each director and shareholder of the proposed company. Where the parent company is not a public quoted company, the shareholders and directors of the parent company who will not participate in the proposed company must also complete a questionnaire. If there are a large number of such shareholders, only those holding more than ten percent (10%) of the issued shares need to complete the questionnaire.
A notarized copy of the following must be provided:-
– the color copy of the photo page of the passport;
– the driver’s license
– of each director/shareholder.
– Confirmation of the current home address of the directors and shareholders, e.g. a copy of a current utility bill.
– A police report on each director and shareholder of the parent company and of the proposed company.
– A banker’s reference for each director and shareholder.
– A lawyer’s reference for each director and shareholder.
– An accountant’s reference for each director and shareholder.
– Curriculum Vitae for each director and shareholder.
Now that you know what you must do to prove your finances and how your corporation needs to be structured, you can begin your application for an international bank license in St. Lucia.
– The class of license required.
– The amount of share capital of the proposed company and the par value of each share.
– The method of raising the share capital (e.g. cash investment by the parent company).
– Certified evidence of capital and deposit requirement. This takes the form of a notarized declaration by the shareholder of the proposed company stating how it is proposed to capitalize the company and an undertaking that the shareholder will provide the capital and deposit required after the company has been incorporated. Where possible the shareholder should provide proof that the capital exists.
– A duly completed and executed ‘Statutory Declaration’ in the prescribed form, a copy of which is attached, by each director and senior manager of the proposed company. Please note that this declaration must be notarised.
– A notarized certified copy of the incorporation /constitutional documents of the parent company.
– Particulars of any shareholder loans to the proposed company.
– Three (3) years (at least) projected income statement of the proposed company.
– Comparative financial statements of the last three (3) years for the parent company.
– Financial statements for the parent company for the current year up to the end of the month before the application is being made.
– In the case of the re-domiciliation of an existing company, (9) and (10) above must be supplied in relation to that company.
– The business plan for the proposed company. The business plan should include:
– An organizational chart showing the group structure, where the Applicant is a member of a group.
– An economic benefits chart showing the flow of economic benefits where this is not plain and obvious from a reading of the business plan;
– A detailed feasibility study explaining why the proposed company wishes to establish an international bank and the assumptions underlying the financial projections.
– A clearly defined list of intended depositors (in the case of applicants for a Class B license);
– A detailed account of how interest has been calculated;
– Detailed assumptions (including security measures and risk management procedure) pertaining to derivative contracts, e-banking, etc. in which the proposed company may become engaged;
– A full account of the proposed company proposed Investment Strategy including
evidence that the proposed company will maintain a well-balanced and diversified portfolio.
– Details of the Applicant’s administrative controls, showing the division between
operational and administrative functions and indicating the checks in place
– A risk analysis report evidencing that the applicant has analyzed the risks inherent in the types of activity proposed
– Detailed information on the proposed company correspondent banking relationships, including information on the correspondent banks themselves.
– Where the Applicant is an existing bank detailed Capital Adequacy Computation Worksheets based on the assets included in each projected balance sheet and computed in accordance with Basle principles.
– Detailed Capital Computation Worksheets based on the Capital items in each projected balance sheet.
– Requisite authorizations and consents from the home regulator or that of a parent company, as appropriate.
– The business record, competence, and experience of the persons who will operate and manage the bank.
– Details of the nature and sufficiency of the financial resources of the parent company and the bank, and
– Details of the soundness and feasibility of the plans of the bank for the conduct and development of the bank’s business. If necessary your registered agent may be able to assist in compiling the business plan or any part of it. In any event, the registered agent will review the business plan and projections to ensure that they meet the expectations of the FSRA.
– Details of the corporate structure. This requires information as to any other companies within a group, e.g. parent, associate companies and subsidiary companies.
Once everything has been approved you will have to comply with local regulations in order to maintain good standing with the authorities in the offshore banking industry. After your license is granted there are some things that you will have to do to keep it working such as:
– Original (or notarised) bank statement showing that the capital has been injected into the company where the capital is cash or other evidence of capitalization as the case may be;
– Original (or notarised) certificate of deposit showing that the $100,000.00 security deposit is being held at an approved bank; and
– A duly executed Agreement of Undertaking by the company in favor of the FSRA/Government of St. Lucia in respect of the security deposit.
As you can see there is a lot you have to follow in order to obtain and maintain an international banking license in St. Lucia. Navigating these waters can be tough and we have many years of experience forming offshore banks. We are happy to help you.