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Passporting into Ireland: A Guide for Credit Institutions

Credit institutions seeking to establish a presence in Ireland can do so through either establishing a branch or providing services without physical presence. In both cases, notification is required under Articles 35 and 39 of the Capital Requirements Directive IV (CRD IV).

Notification Process

For credit institutions within the Single Supervisory Mechanism (SSM), the European Central Bank (ECB) will be the home authority for significant banks, while the Central Bank of Ireland (CBI) will be the home authority for less significant banks. The CBI uses notification forms based on Commission Implementing Regulation (EU) 926/2014 to facilitate the process.

Branch Establishment

Non-EEA foreign-headquartered and licensed credit institutions wishing to operate a branch in Ireland must obtain authorization under Section 9A of the Central Bank Act, 1971 (as amended). The CBI’s decision will be based on factors such as:

  • Equivalency of regulatory oversight between the home state and Ireland
  • Nature of activities by the branch
  • Potential systemic impact on the Irish financial system and economy

Obtaining a Banking Licence in Ireland

To provide banking services in Ireland, credit institutions must obtain an authorization from the CBI. The application process involves providing detailed information on:

  • Parent/group company
  • Ownership structure
  • Business plan
  • Capital and financial projections

The CBI focuses on:

  • Corporate governance and oversight arrangements
  • Risk management
  • Internal controls
  • Business plan

Application Process

The procedure for obtaining a licence typically involves three stages:

  1. Exploratory Phase: An initial consultation with the CBI to discuss the application.
  2. Formal Application: Providing detailed information on the applicant’s operations and business plan.
  3. Final Decision: The CBI reviews the application and makes a decision.

There is no specific timeframe for the assessment process, which may depend on the quality of responses from the applicant and any necessary clarifications or changes made during the process.

Funding Banks in Ireland

Irish banks are funded through a mix of:

  • Equity share capital
  • Debt instruments
  • Securitisations
  • Derivative financial instruments
  • Disposals of non-performing loan books
  • Corporate and personal deposit accounts

The types of capital that qualify for capital adequacy purposes include:

  • Common equity tier 1
  • Additional tier 1
  • Tier 2

Conclusion

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With this guide, credit institutions can navigate the process of passporting into Ireland and understand the regulatory requirements and funding options available to them in the country.