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Owning a Offshore 'Bank'

wellington

wellington

Mentor Group Gold
Nov 14, 2020
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#1
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Hit the point of my life where i literally have nothing to do, and have enough rubles to last me 10 life times, when establishing a company to buy a property in my homeland for a getaway vacation home, i came up with all sorts of issues with banking i've never experienced before (freezing, unfreezing, deletion, re-creation) etc, tonnes of questions i consider just impolite :p

Anyway it got me thinking and i googled banks for sale in the Carib, and noticed theirs banks (entire banks) for sale for 200-5m.

Has anyone here ever considered just buying their own bank? whats the hurdles, and are they profitable?

Generally interested to learn more, perhaps a new career to get me away from turning my yard into a outhouse parlour (building things repeatedly).
 
#2
Just buying a bank in carribean country does not mean, you own a bank. They sell you a company with a baking licence, but all employees are out fo company in time of sale. All regulatory authorities requires you to hire a stuff with defined experience and education, having physical office atc.. Everything can be solved with money and right people. BUt from time when you buy a bank to time when you have a really functional bank with everything needed, it takes 1-2 years. If it is your goal and dream to have your own bank and if you have a money, you can have it.

Almost no one is selling functional bank. The most of those which are for sale are shells only. It is empty company with a license. Making any real due dilligence on bank is extremely hard task. Higins things in bank is easier than in any other business. So, you are risking to buy a real box of problems when you buy a carribean bank.

If you have a money, easier is to hire some basic staff and open a completely new bank in some better jurisdiction. In eastern europe, you can open a bank with less than 2 billion Eur.
 
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#4
Martin Everson said:
You mean 2m obviously. Maybe a Lithuania bank with specialized banking license your referring too?
Click to expand...
No. 2 billion. In Czech Republic, Slovakia, Hungary Poland - you have to make a security deposit to a national bank in amount of 1 billion EUR or equivalent in foreign currency. They just hold it interest free as a guarantee in case if anything bad happens with your bank. You will need some main bulding for staff, some branches.. Real estates are not cheap in Europe. To fulfill all criteria set for a banks, you have to hire at least few hundred very good qualified and experienced people. Just cost ti pay them for 1-2 years is aprox. 120 mil. Eur (including taxes and mandatory insurances)..

For 2 Mil Eur, you can have some fancy banking license in one of carribean countries, but not in EU. Just check some magazines what were a prices of some small banks sold in Europe in last years. All transactions are in billions Eur.
 
#5
Don't do it. Banks like that are useless since they can't get stable access to correspondent accounts. You will be spending 90% of your time looking for and carefully maintaining correspondence relationships. The other 10% will be finding clients that fit your and all your partners' narrow acceptance criteria.

If you want to start a bank, the EU is probably the best place to do it. Regulators are fairly reasonable and you get access to EUR and SEPA quite easily. From there, you can build up a correspondence network.

LoveMyLife said:
No. 2 billion. In Czech Republic, Slovakia, Hungary Poland - you have to make a security deposit to a national bank in amount of 1 billion EUR or equivalent in foreign currency. They just hold it interest free as a guarantee in case if anything bad happens with your bank. You will need some main bulding for staff, some branches.. Real estates are not cheap in Europe. To fulfill all criteria set for a banks, you have to hire at least few hundred very good qualified and experienced people. Just cost ti pay them for 1-2 years is aprox. 120 mil. Eur (including taxes and mandatory insurances)..

For 2 Mil Eur, you can have some fancy banking license in one of carribean countries, but not in EU. Just check some magazines what were a prices of some small banks sold in Europe in last years. All transactions are in billions Eur.
Click to expand...
I'm not sure what you are basing this on. 2 million EUR is the capital requirement for a special banking license in Lithuania. It's 5 million EUR for a full banking license across the EU. Depending on scope of business, the regulator may ask for more in Own Funds, but it won't be in the billions in most cases unless you have a business plan that necessitates that level of capitalisation.

You certainly don't have to hire hundreds of people. Several banks have popped up lately across the EU with well under 100 FTEs, and more are in the pipeline.

This isn't a black and white checkbox exercise. The regulator will look at your business plan and make sure your funding and team are in line with that plan.

Sure, if your plan is to be a huge bank of national importance, they will want billions. If you plan to start a bank that focuses on SMEs and will only onboard local and EU companies, you can get away with a far smaller operation.
 
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#6
LoveMyLife said:
No. 2 billion. In Czech Republic, Slovakia, Hungary Poland - you have to make a security deposit to a national bank in amount of 1 billion EUR or equivalent in foreign currency.
Click to expand...

You do not need 2bn euros to start a bank in eastern europe. Are you having a laugh?

https://www.ecovis.com/lt/fintech/specialised-banks/
Even in western Europe you need nothing like that amount. Check out startup banks like Bunq, Starling bank etc.
 
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#7
Both "banks" started as financial start ups and not like banks. Check their history. They did not have enough capital to obtain at least some kind of limited bank license. After some time, they received limited banking licenses. With extremely limited possibilities what they can do.

Just look at starling bank. Their loss in last 3 years is over 150 million. They are the best candidate to lose their banking license and become just standard financial license company, again.

And Bunq - yes, Netherland does not require 1 billion Eur deposit. They just require 200 millions for a limited license. And 1 billion for a full license. So see a Bunq balance sheets and statements. They hold at least 200 mil Eur deposit with a central bank. And they are still a bank with a limited license.

Please, read a law of some european countries. The most of them require extremely high deposits with a central bank just to have a license. And I am not mentioning a costs.

So, if you want to have some kind of fancy bank, with a limited license, 0,25 bil. Eur can be enough. You hire 20 people and start a junior business with some kind of "small online bank". But if you want to start a real bank, you need 2 bil. Eur

N26 is a German bank with limited license. Germany requires deposit of 0,5 bil Eur for limited license. So, N26 has a limited license only. They deposited 0,5 bil Eur and they also invested 0,2 bil more for their start. Their actual own funds are 683 mil. Eur. And they are still a bank with limited license.

Do you know how many of this "limited license" banks were profitable in last 3 years? I will tell you: NONE

Starling loss is over 150 mil Eur.

N26 loss in 3 years is 105 mil Eur.

And just for fun of, Bunq with their 35k clients (what is totaly small bank - N26 has 10 times more clients) loss in 3 years is almost 40 mil Eur.

All this small banks with limited licenses are just burning a huge money. It was nice idea to try to build a nice small online bank in Europe. Many people liked this idea. But results are terrible. All this small banks with limited license are absolutely unable to make any profit. There is no return on investment.

The only difference between what I write and what you write is that I am writing about a real bank and you are writing about fancy bank with limited license which is unable to create any profit.

So, openning a bank in Europe with 2 mil Eur is a joke. It can be some kind od Fintech startup. But not a bank.
 
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#8
You are wrong on so many points it'd be too tiresome to go through them all. An unfortunate flurry of conjecture and misinformation. It's surprising since many of your other posts have been rather spot on, but now I'm doubtful.

Fortunately, primary sources are readily available, such as:

Article 12

Initial capital

1. Without prejudice to other general conditions laid down in national law, the competent authorities shall refuse authorisation to commence the activity of a credit institution where a credit institution does not hold separate own funds or where its initial capital is less than EUR 5 million.

2. Initial capital shall comprise only one or more of the items referred to in Article 26(1)(a) to (e) of Regulation (EU) No 575/2013.

3. Member States may decide that credit institutions which do not fulfil the requirement to hold separate own funds and which were in existence on 15 December 1979 may continue to carry out their business. They may exempt such credit institutions from complying with the requirement contained in the first subparagraph of Article 13(1).

4. Member States may grant authorisation to particular categories of credit institutions the initial capital of which is less than that specified in paragraph 1, subject to the following conditions:

(a) the initial capital is no less than EUR 1 million;

(b) the Member States concerned notify the Commission and EBA of their reasons for exercising that option.
Click to expand...

https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32013L0036&from=EN#d1e2034-338-1
Paragraph 1 has been transposed almost entirely as-is, sometimes with conversion to local currency or slightly higher. Few member states have transposed paragraph 4, but that is the special banking license available in Lithuania.
 
#10
If you have that serious coin.

Go to some island country and tell them you set up bank and your pitch is to apply the exact same compliance as in eu lol, maybe the eu will like you too if you bring their holy compliance grail to some far flung island place. So you get some correspondent banks on board due to eu empire expansion lust.

Who knows maybe you also get a cheap sweet licence deal with your flagship compliance project in a covid starved island. ;)

Your first compliance officer is of course gentle if you want to buy a home somewhere.
 
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#11
A new bank targeting SMEs was recently launched in France (first time in 50y for an entity with no ties to other financial institutions). It took them 3 years: first funding round of 7m€, 2 years to get the license, then a second round of 20m€ but only after the license was granted by French and European regulators. I think that they already opened 2 physical branches. This is doable pretty much everywhere, at a lower cost and probably quicker.
 
#13
I think LoveMyLife have to nich fantasies. All Threads I’m reading all he Post is nonsense. From building your own bunker to store your gold, Estonia is best offshore country and you Need 5 bio for Estonian bank license. I wasn’t laughing so much lately to be honest. So honestly please don’t advise people something if you have no knowledge you will just harm people with your answers.
 
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#15
Your biggest cost will not the bank license itself but the necessary capital raising to show you have so-called "Capital Adequacy". Distressed banks (banks who are in financial trouble) are plenty and can be bought for as little as $2.5m, but capital requirements could be anything from $5m-200m depending on the deposit aspirations you have. If you go to east Europe like Estonia or Latvia usually banks run about 250-500 mio (private Banks) so here some facts for everybody who is not interested in fairy tales. But nowadays compliance requirements need also a quality team So most will fail on this part hardly.
 
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#16
Check out Private Banking license in Andorra, 500k to have office.

Carribean licenses were 50,000$ some years back.....now all try and get 1M$ for the license.

2Billion is ridiculous.
 
#19
Its peanuts compared to old prices.
I remember a private swiss bank with 2 billion of customers funds being offered for 10 million
There were of course smaller banks from other jurisdictions for way cheaper however you should ask yourself why they sell now so cheap
Or ask yourself why big banks are splitting into customer banks and investment banks
 
#20
369 said:
Its peanuts compared to old prices.
I remember a private swiss bank with 2 billion of customers funds being offered for 10 million
There were of course smaller banks from other jurisdictions for way cheaper however you should ask yourself why they sell now so cheap
Or ask yourself why big banks are splitting into customer banks and investment banks
Click to expand...
Zero chance in hell that a bank with 2 billion dollar of customer funds in Switzerland will sell for 10 million.
Post the name or GTFO with your BS.

Even a "small" bank, Glarner Kantonalbank with only 5.2 billion CHF assets, is currently trading in SIX for 326.60 million CHF market cap.
So pls send me the name of this bank that I can buy for 10 million adn then take public for a "measly" valuation of 125 million CHF .. or you know what, even 100 million CHF will be fine by me.
For this I'm sure I can get a 10 million bridge loan smi(&%

Seriously, how many ridiculous lies can a single person can post in this forum before getting banned
 
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