Specialised bank licence in LatviaOverview
A specialised credit institution in Latvia is a bank in the full legal sense. It may accept deposits and provide the financial services listed in the Credit Institution Law, and it is subject to the same prudential rules, governance standards and supervisory process as any other credit institution. What differs is the entry threshold and the business focus: the initial capital requirement is EUR 1 million rather than EUR 5 million, and in return the bank must meet at least one of three criteria defined by Latvijas Banka.
Those criteria are a limited customer base defined territorially, by employment or by a common interest; provision of services exclusively through digital channels; or the offer of innovative services that are new or substantially improved at national level. The model is designed for challenger and niche banks, for example digital banks for SMEs, banks serving a professional community, or institutions built around a new product, rather than for universal retail banking from day one.
Because Latvia is in the euro area, the authorisation decision belongs to the European Central Bank under the Single Supervisory Mechanism. Latvijas Banka runs the process: it holds free pre-application meetings, checks the file for completeness (generally within one month, subject to the ECB's own completeness review), assesses the application with the ECB and submits a draft decision. Before operations begin, the initial capital must be paid in, and on the day of licensing the founders must have or be able to evidence funding for three years of operations under the business plan. Latvijas Banka does not charge for the application itself; a supervisory fee of up to 0.033% of average quarterly assets applies after authorisation.
The bar is set by substance rather than by capital alone. Latvijas Banka assesses qualifying holders (including information on the twenty largest shareholders and the origin of their funds), the suitability of management and supervisory board members, a business plan prepared to the EU regulatory technical standards, and around two dozen policies covering risk management, liquidity, AML/CFT, ICT, consumer protection and continuity. Outline policies are sufficient for licensing, but full policies must be approved before launch. Sponsors should plan for an intensive dialogue with both supervisors and allow up to twelve months for a decision once the application is complete.
Key benefits
- Full EU credit institution status with deposit-taking powers
- Initial capital of EUR 1 million instead of EUR 5 million
- EU passporting of banking services across the single market
- No application or authorisation fees; supervisory fee linked to asset size
- Free pre-application dialogue with Latvijas Banka, including on innovative products
- Euro-area jurisdiction under ECB oversight, supporting correspondent and payment-scheme access
- Well-suited to digital-only and niche banking models
Requirements
- Initial capital of at least EUR 1 million paid in before operations begin
- Evidence of funding for three years of operations under the business plan
- Meeting at least one specialisation criterion: limited customer base, digital-only delivery or innovative services
- Suitable and reputable qualifying holders, with transparent origin of funds
- Management and supervisory board members assessed as suitable by Latvijas Banka and the ECB
- Business plan prepared in line with Delegated Regulation (EU) 2022/2580
- Risk management, liquidity, capital adequacy and recovery planning frameworks
- AML/CFT and sanctions compliance framework proportionate to the business
- ICT, outsourcing, information security and business continuity arrangements
- Registered office and real management presence in Latvia
Licence options & capital
Specialised credit institution
EUR 1 million initial capital
For digital-only, community-focused or innovative banking models meeting at least one specialisation criterion, with the same prudential rules as other banks.
Conventional credit institution
EUR 5 million initial capital
For universal banking models without the specialisation constraints, following the same Latvijas Banka and ECB authorisation process.
Electronic money institution
Where deposit-taking and lending are not required, a Latvian EMI licence may offer a faster and lower-capital route to EU payment and e-money services.
Step-by-step process
- 1
Pre-application meeting
Plans are discussed with Latvijas Banka free of charge; the bank does not yet need to exist. Draft CVs, shareholder information, capital financing and a draft business plan are typically shared.
- 2
Application preparation
The full file is prepared: shareholder and management documentation, business plan, capital evidence and policy outlines.
- 3
Submission and completeness
Latvijas Banka checks completeness, generally within one month, alongside the ECB's completeness review.
- 4
Substantive assessment
Latvijas Banka and the ECB assess the application, with information requests and meetings with the applicant.
- 5
ECB authorisation
Latvijas Banka submits a draft decision and the ECB adopts the authorisation. Capital is paid in and reporting users designated before launch.
- 6
Supervision
A Latvijas Banka curator is assigned; regular reporting and notification of material changes follow.
Typical documents
- Fit and proper questionnaires and CVs for proposed officials
- Information on qualifying holders and the twenty largest shareholders, with financing amounts and origin of funds
- Summary of capital financing and founders' financial standing
- Business plan with three-year financial projections and capital evidence
- Articles of association and governance structure
- Risk management, liquidity and capital adequacy policies
- AML/CFT and sanctions policies
- ICT, outsourcing, security and business continuity policies
- Consumer protection and complaints procedures
How Legal Wealth helps
Legal Wealth works with sponsors to test whether their model genuinely qualifies as a specialised credit institution and to prepare for a demanding, two-supervisor process. We coordinate shareholder and management documentation, source-of-funds evidence and the business plan with the discretion that bank ownership requires, and we help assemble the policy framework and local substance Latvijas Banka expects. Our role is to keep the project compliance-led and realistic from the first pre-application meeting.
Enquire with Legal WealthFrequently asked questions
Is a specialised bank a full bank?
Yes. It is a credit institution authorised by the ECB that may accept deposits and provide the services in the Credit Institution Law, subject to the same rules as other banks.
What is the minimum capital?
EUR 1 million initial capital for a specialised credit institution, compared with EUR 5 million for a conventional bank, plus funding for three years of operations.
Who decides on the licence?
The European Central Bank adopts the authorisation decision on the basis of Latvijas Banka's assessment and draft decision.
How long does it take?
After a complete application, the assessment may take up to twelve months. Preparation before submission usually adds several months.
Are there application fees?
Latvijas Banka does not charge for pre-application advice, review or authorisation. A supervisory fee of up to 0.033% of average quarterly assets applies once licensed.
Can the bank passport across the EU?
Yes. As an EU credit institution it can use passporting to provide services in other member states after notification.
Last reviewed: 2026-10. Requirements, fees and timelines change. Information is general, reviewed on the date shown, and is not legal or tax advice.
