Is your bank a dream or a reality?

2.10.2022
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свой банк

The market for lending, financial and banking services is developing everywhere today. The Bank has a special place in high-yield activities. Starting your own business in the form of a bank is usually considered by people who are well acquainted with this activity, in particular, they are well versed in banking services, finance and lending. This type of activity is not suitable for everyone, but this does not mean that you need to give up your dream without even making an attempt to realize it.

Naturally, the path to your own banking will not be as easy as it seems at first glance. Banking is considered the most regulated and controlled type of business in the world. Every action of the bank is closely monitored by regulators and auditors. As a rule, the appearance of new players does not cause much enthusiasm among regular participants. Newcomers are also checked far and wide by regulatory authorities.

If you want to open your own bank, then this article will help you understand the approximate plan of action. We will tell you about the key components that are needed to create your own offshore banking. If you complete these tasks, you will become the owner of a functioning bank that will be able to achieve your goals.

If you are a single-minded person, then you need to make every effort to realize your dream. Where should I start? You do not need to rush to invest huge amounts of money in opening your own financial institution, you need to weigh all the pros and cons, as well as study the existing nuances of activity. First of all, you need to develop a business plan for the bank.

A business plan is a document that contains recommendations for conducting preparatory and registration activities. The business plan also specifies requirements for premises, equipment, and personnel. The financial part of the business plan should include calculations of income and expenditure items of the project, as well as their analysis. Before you start making calculations in your business plan, find out the actual costs of obtaining a license in different jurisdictions. For example, officially the authorized capital should be equal to $ 1 million, but in fact you need several times more. If you do not have such a sum, you will not be allowed to enter the financial sector, and an appeal will not help you. That’s what they do in Belize. This is not surprising, as this attitude has led to the fact that the most recent license turned 7 years old this year.

create a bank

The content of the business plan should convince the regulator that you want to work, have relevant experience, capabilities, and a general understanding of the banking system. If you manage to do this, you will become the owner of the coveted license to carry out activities. The requirements for banking institutions are very high. In addition, regulators thoroughly check the work of each financial institution, as well as fully monitor it. This control is especially noticeable in small states, where a bank that violates the rules can harm not only the entire financial sector, but also the country.

You should spend a lot of time developing a business plan. If you are in doubt about the correctness of its registration, you can use the help of specialists who will help you with both the registration of documents and financial calculations.

Creating a high-yield bank is possible only if all the main tasks that a novice entrepreneur faces are solved gradually. The implementation of a business project should be carried out by a person who has knowledge in the field of finance and experience working with them. If an aspiring businessman is not connected to the world of finance, then the best solution is to hire a financial adviser.

The range of services depends on the choice of direction and specialization of the bank. The most popular and widespread types of services are: —

  • opening of deposits and deposits;
  • issue of plastic debit and credit cards (personal, salary);
  • opening and maintaining current accounts of individuals and legal entities;
  • cash desk and exchange office services;
  • issuance of loans and credits;
  • brokerage services, etc.

The main drawback of this project is a large initial investment. In addition, the bank registration process is accompanied by a large package of permits.

The advantage of opening your own bank is that when the payback period for initial investments is reached, the entrepreneur will begin to receive a high and stable income.

How do I open a bank?

register a bank

Opening your own bank begins with the creation of a closed joint-stock company. This type of activity is considered one of the most profitable, as the demand for bank services is constantly growing.

One of the main divisions of the institution is the credit department, which prepares all the necessary documents for lending, and also works closely with other departments of the commercial bank.

Banks should provide customers with a very large list of services, including opening and maintaining a personal account, cash operations, issuing loans and guarantees, issuing plastic cards, etc.

As for the initial capital investment, you need to have more than one million dollars to open a bank. This amount will be enough to open a small bank. If you want an average bank, then you need to increase this amount several times. Since this type of activity is considered very profitable, then in 5 years with good business management, the bank will be able to fully recoup all expenses. In this area, you can get very large earnings, if you think through all the little things well.

The efficiency of banks primarily depends on customers who need the ability to send and withdraw money. If the bank is physically located on the other side of the world and operates only in local currency, it is unlikely that anyone will be interested in it.

To carry out currency transactions, the bank must have correspondent accounts. For an international organization, the presence of correspondent accounts is an essential component, without which the bank will not be able to operate.

For example, if you are going to conduct transactions in dollars, then you need a correspondent partner who works in this currency. You need to look for it among US banks, that is, your goal is to get closer to the economy of the country whose currency you will use. However, you can simply open a correspondent account with institutions that are not directly related to the selected currency. This is also the case with any other currency – euro, yen, pound or franc.

A serious problem at this stage is that finding a partner is an expensive pleasure. If a license is issued, for example, in the Comoros, it will cost about $ 0.5 million, then an agreement on cooperation in dollars with a foreign partner will cost about $ 10 million, and the partner still has to agree to cooperate.

You can lose your correspondent account at any time. Any deviation from the rules, even a small one, can attract the attention of the regulator, or you will simply frighten the partner with your actions, as a result of which the correspondent account will disappear.

It is for this reason that banks try to cooperate simultaneously with several partners in order to reduce risks and dependence on a particular foreign bank. It is advisable to open a banking structure with the help of specialists, since they know how best to do this, where to purchase an IT system, open correspondent accounts, etc.

How to register a bank in Ukraine?

creating a bank

As we have already said, banking is considered one of the most profitable in the field of providing services. In addition, banks can constantly receive investments from outside, thanks to this opportunity, you can significantly increase income.

The creation of a bank in Ukraine involves several stages. Opening a financial institution first of all begins with drawing up the necessary documentation:

  • minutes of the meeting of participants (founders);
  • charter or foundation agreement;
  • decisions on setting up an institution, etc.

In addition, the founders must collect a package of documents that will confirm their business reputation and financial viability.

If the legal form of the bank is PJSC, then you should apply to the National Securities and Stock Market Commission for a temporary certificate of the issue of shares, as well as conclude an agreement with the Central Securities Depository, which is engaged in servicing the issue of shares.

The charter and purchase of a substantial share of each participant is agreed with the National Bank of Ukraine. Each new bank must open a special savings account with the NBU and collect on it all the funds of the bank’s participants specified in the charter.

To apply for registration of a bank, you must first organize a legal entity of the legal form established by the state. It can be a public joint-stock company or a cooperative. Then you need to include the company in the State Register of Banks, this is done on the basis of a banking license. A license is a document that confirms that your company meets the requirements set out in the regulatory legal acts related to the activities of commercial banks.

A bank is a legal entity that can provide banking services to its clients under a license.. The authorized capital for opening a bank in Ukraine should have been at least UAH 500 million. Of course, the NBU may also set a higher amount of authorized capital for some legal entities that want to engage in banking activities.

Ukrainian banks have the legal form of PJSC or cooperative bank. The main participants of the bank must have an impeccable business reputation and a satisfactory financial condition. Citizens ‘ associations, charitable foundations, and religious organizations cannot participate in the bank.

Cooperative banks (CBBs) can be local or central. For a local design bureau, the minimum number of participants must be 50 or more people within the same region. If the number of participants decreases and the bank is unable to increase them to 50 people in a year, then the bank’s activities will be terminated by assigning a different legal form or liquidation procedure.

Participants of the central design bureau are local design bureaus, their task is to centralize and redistribute resources accumulated in local design bureaus, as well as to control the work of regional design bureaus. Banks can provide banking and other financial services in local currency, with the exception of insurance. To perform operations with foreign currency, you need to obtain a general license.

The establishment of the bank and its successful operation depend on the size of the authorized capital, preferably more than 120 million hryvnia. In addition, the founders ‘ business reputation, including their ability to pay, plays a huge role.

Registration of a bank is a kind of permission to carry out official activities. This means that from the moment of registration, the bank can provide banking and financial services, with the exception of insurance.

A registered bank can::

  • engage in investing activities;
  • issue shares;
  • conduct lotteries;
  • store values;
  • maintain various registration systems;
  • provide consulting services;
  • perform cash collection, etc.

Due to the fact that the bank’s activities are multi-profile, the owners of the bank can count on a large income, open up new areas of the market and find the most profitable and promising areas for their activities.

What employees can I open a bank with?

bank's business plan

Capital and a business plan are a small part of what you will need to open your own bank. The key element of any business is, of course, people. The CV of key employees and beneficiaries of the bank is submitted together with the business plan, all of them should have experience in the banking sector.

Regulators are lenient with projects that involve local specialists. This life hack will be useful not only in obtaining a license, but also in providing services.

What software is needed to create a bank?

Banking institutions have long abandoned ledgers and paper archives. All information about clients and their accounts, transfers, and checks is stored in a special IT system. The bank’s IT system is also responsible for the client’s money transactions and confirms their trustworthiness. As a rule, software costs a tidy sum, starting from $ 100,000, and ending with millions of dollars.

Often, a banking institution is accused of slowness, excessive meticulousness and pickiness. However, not all customers know that banks must comply with strict conditions and thoroughly check their customers, as well as the operations they conduct.

The control system usually “surrounds” the selected IT system. This means that all data that passes through the banking system is processed. This is necessary to ensure that the offshore bank is not subject to penalties and is not disconnected from correspondent accounts.

The size of fines in the banking sector is simply huge, often amounting to millions or even billions of dollars. Only a few will be able to withstand such a blow. Small banks created for a specific business or family will be forced to close. The compliance must be thoroughly described in the business plan. Any omission found by the regulator may lead to a refusal to issue a license.

As we have already mentioned, regulators thoroughly check new institutions to avoid possible shocks in the banking sector of their country. In practice, there have already been cases when the problems of one institution became common, and not just the entire sector, but the entire country was disconnected from correspondent accounts.

Prudent businessmen conduct an IT system deployment immediately after receiving permission from the regulator. Thanks to this solution, they can start working immediately after obtaining a banking license. If you do everything in order, then from the moment of installing the program, it should take 3 months, or even six months, for the bank to function normally.

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