The UK is presently heading for a “hard” Brexit. If this happened, the country would leave both the EU and the European Economic Area. Many UK banks and financial services providers are therefore right to consider relocating their domicile or business to the continent and especially to Germany.
The background is that, in case of a no-deal Brexit, companies from the UK would no longer be able to carry on their business or provide financial services in other countries of the European Economic Area by virtue of the so-called European Passport. In such case, they would need the license of a member state. In Germany, the necessary license is the so-called BaFin license.
For all those endangered by Brexit and other financial services providers, we are taking a look at the fees involved in an authorization procedure with the Federal Financial Supervisory Authority (BaFin).
Costs of the Authorization Procedure in Germany
An application for a BaFin license is, in principle, subject to a fee. The amount of the fee will depend on the type of banking business and/or the financial services applied for in the individual case. The relevant provision in this context is contained in section 2 (1) of the German Regulation on the Imposition of Fees and Allocation of Costs pursuant to FinDAG (FinDAGKostV) in conjunction with the appended schedule of fees. The abbreviation FinDAG refers to the Act Establishing the Federal Financial Supervisory Authority (Finanzdienstleistungsaufsichtsgesetz; “FinDAG”).
The rates for an authorization to provide financial services, e.g. investment broking or financial portfolio management, range from at least EUR 4.545 up to EUR 10.160.
If an applicant additionally wishes to obtain a German authorization to conduct banking business in Germany (e.g. deposit business or lending business), the fee can increase to up to EUR 22.295. In this context, it is important to note that the fees may be charged even if an applicant withdraws the application for authorization or if BaFin denies the application.
Costs of Ongoing Supervision
Furthermore, it must be noted that BaFin allocates its current costs to the institutions it supervises, including
- credit institutions,
- financial services institutions,
- payment institutions, and
- e-money institutions.
These institutions have to reimburse the costs on a pro-rata basis. In order to determine the exact costs and assess the allocation amounts, BaFin defines areas of supervision and categories. The allocation amount in the “banking and other financial services” area of supervision, to which e.g. banks and most financial services providers are subject, will basically depend on the ratio of the balance sheet total of the individual undertaking subject to the cost allocation to the aggregate total of the balances sheet totals of all undertakings subject to the cost allocation in that category. For further details on the allocation of costs, please refer to FinDAG.
WINHELLER advises on BaFin license applications
A BaFin license may be interesting for FinTechs and foreign financial services providers not only in case the passporting option is excluded. Because Germany – as a quality location and the strongest market in Europe – offers market participants important opportunities that, in most cases, are likely to make the costs of the license procedure appear insignificant.
In addition to the excellent reputation among all stakeholders, BaFin’s strict quality standards help especially undertakings acting at an international level to handle their dealings with (mostly less strict) foreign supervisory authorities more easily. As a result, they are perfectly prepared for their market entry in other target countries or Europe.
We will be pleased to pave your way to a BaFin license and accompany you throughout the authorization procedure in Germany. We are looking forward to hearing from you.