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Office Space in Aruba: New Regulations for Foreign Banks
Oranjestad, Aruba - The Central Bank of Aruba (CBA) has announced new regulations governing the licensing of foreign banks operating branch offices in Aruba. The revised policy aims to ensure the stability and soundness of the banking industry on the island.
New Requirements for Foreign Credit Institutions
According to the CBA, foreign credit institutions seeking a licence to operate a branch office in Aruba must meet stringent requirements:
- Minimum balance sheet total of $10 billion
- “A” rating from Standard & Poors or a comparable rating agency
- Comprehensive consolidated supervision by their home country supervisor(s)
- At least 30 years of experience in banking and a proven track record
- Financial statements for the last three years certified
Prohibition on Parallel-Owned Banking Structures
The new regulations also prohibit the creation or expansion of parallel-owned banking structures, where multiple banks operate under different jurisdictions but are owned by the same individuals or entities. This is designed to prevent regulatory arbitrage and ensure that Aruban banks are not exposed to unnecessary risk.
Requirements for Major Shareholders
Furthermore, the CBA has introduced a condition requiring major shareholders of credit institutions established in Aruba to be financial institutions with solid financial strength and reputation, subject to comprehensive consolidated supervision by their home country supervisor(s).
Effective Date and Transition Period
The new policy comes into effect on January 1, 2018, and banks whose shareholder structures are not compliant will have one year to adjust. The CBA reserves the right to request additional information during the evaluation process.
Extension of Grace Period
In related news, the CBA has extended a grace period for banks that do not meet the new requirements. Banks will have until December 31, 2022, to comply with the regulations.
Maintaining Stability and Soundness
The revised policy aims to maintain the stability and soundness of Aruba’s banking industry, ensuring the continued confidence of investors and the public.
Key Documents Required for Evaluation
- Business plan for a five-year period
- Certified opening balance sheet
- Draft articles of incorporation
- Annual reports from the parent company for the last three fiscal years
- List of correspondent banks
- Personal Questionnaire from prospective managing and supervisory directors
- Written statement from home country supervisor(s) confirming compliance with regulatory requirements
- Written statement from home country supervisor(s) confirming adoption of international banking supervision standards
- Expert external reports on compliance with Basel Core Principles
- Detailed description of intended administrative organization and internal controls
Contact Information
For more information, please contact the Central Bank of Aruba at:
Email: info@cba.aw Phone: +297 582 2200 Fax: +297 582 2222