Licensing

The Act provides for the issue of two types of licences: (a) a banking licence, and (b) a deposit company licence.

A banking licence requires the institution to provide the following minimum services to the public in Bermuda:

1. current accounts in Bermuda dollars on terms which require repayment on demand;
2. the payment and collection of cheques, draft and orders;
3. savings, deposit or other similar accounts in Bermuda dollars;
4. overdraft and other loan facilities in Bermuda dollars;
5. either directly or indirectly, loans in Bermuda dollars secured on the mortgage of real property in Bermuda;
6. foreign exchange services; and
7. either directly or indirectly, credit card or debit card facilities.

A deposit company licence does not authorise the institution to accept deposits of money on current account or otherwise on terms which require repayment on demand but does require the institution to provide the following minimum services to the public in Bermuda:

1. savings, deposit or similar other accounts in Bermuda dollars on terms which require repayment on notice; and
2. loans in Bermuda dollars secured on the mortgage of real property in Bermuda whereby not less than the prescribed minimum percentage of total assets (currently 60%) of the institution shall at all times be invested in loans secured to the full amount of the outstanding balance owed to the institution under such mortgages. (The Act provides for the Minister acting on the advice of the Authority to change the prescribed minimum percentage from time to time).

A bank must at the time of licensing have initial net assets amounting to not less than $10 million (or an amount of equal value denominated wholly or partly in another unit of account). A deposit company must have initial net assets of not less than $1 million or equivalent.

The Authority may not grant a licence unless it is satisfied that the minimum criteria in the Second Schedule to the Act are fulfilled and unless the Minister of Finance has advised the Authority that he/she is satisfied that the grant of a licence is in accordance with the economic and financial policy of the government.

The Banks and Deposit Companies Act 1999 provides a general prohibition on the carrying on of deposit-taking business in or from within Bermuda unless a person is licensed or exempt.

The Act prohibits the carrying on of a deposit-taking business in or from Bermuda unless the person is licensed or exempt.

Under the provisions of the Act, a person carries on deposit-taking business if:

1. in the course of the business, he lends money received by way of deposit to others; or
2. he finances any other activity of the business wholly or to any material extent, out of the capital of, or the interest on money received by way of deposit.

Only companies incorporated in Bermuda are eligible for a licence under the Act. The licensing of branches of foreign banks is not permitted.