Services Overview
The Authority will only license suitable applicants with the capacity and commitment to conduct business with integrity, prudence and competence on a continuing basis.
The Authority expects all applicants to be able to comply with its prudential and market conduct requirements, as set out in various financial services laws including the related secondary legislation (Regulations, guidelines, directives etc.) from the commencement of their financial services operations.
Prospective applicants should familiarise themselves with the relevant legislation. It should be noted that more stringent or otherwise modified prudential/ market conduct requirements may be set on a case-by-case basis, for example, for newly licensed FSPs in their formative years or those specializing in particular business lines.
If there are any changes in the information furnished in the application prior to the issuance of the license, the Registrar should be notified immediately.
Unless otherwise indicated, the considerations set out below are applicable to all applicants. These criteria represent the minimum requirements that an applicant will need to meet for a license application to be considered.
The Authority will evaluate the information provided and where appropriate the information will be verified and investigated. Depending on the circumstances, the FSRA may refuse an application on other prudential grounds not covered in these guidelines.
Public interest
Applicants must satisfy the FSRA that the proposed establishment will be in the public interest, that the business of the proposed will be conducted in a prudent manner, and that the applicant does not propose to adopt undesirable methods of conducting business.
Business Plan
An applicant for a license shall provide details of a feasibility study, business plan and projected balance sheets, income statements and cash-flow statements covering a three (3)-year period.
The Authority must be satisfied that the business plan is comprehensive, realistic, and viable. The business plan must specify clear assumptions used, market analysis conducted including target market(s) and types of products and services to be offered, describe and provide a diagram of the financial institution’s corporate structure and include all entities within the structure (parents, subsidiaries, companies under common control, and other affiliates including their ultimate beneficial owners, if the financial institution will be part of a group.
Ownership
Shareholders of an applicant are required to demonstrate to the FSRA that they are ‘fit and proper’ and that their shareholding in an FSP is not contrary to the public interest and that they have the capacity to contribute additional capital, if required.
In terms of the FSRA Act, 2010, Section 41(1) provides that a person shall not, without the prior written approval of the Authority acquire by transfer either directly or indirectly a controlling interest in the share capital exceeding 20%. A person is regarded as a significant owner of an FSP if the person, directly or indirectly, alone or together with a related or inter-related person, has the ability to control or influence materially the business or strategy of the FSP.
Capital, Sources of Capital, and Liquidity
The applicant shall indicate and declare to the Authority the main sources of funds and/or wealth from shareholders and subscribers for acquiring shares in the proposed institution.
FSPs are expected to maintain appropriate capital resources, in terms of both quantity and quality, taking into account the risks to which they are exposed. Having enough capital of sufficiently high quality reduces the risk of an FSP becoming unable to meet the claims of its creditors and is therefore crucial for maintaining creditor confidence.
The FSRA expects all FSPs to at all times maintain capital as prescribed in the relevant regulations. The FSRA will determine the appropriate size and composition of an applicant’s liquidity buffer as well as assess the adequacy of its start-up capital, on a case-by-case basis, based on the nature, scale and complexity of its business as proposed in the business plan.
The FSRA expects FSPs to observe a prudent funding profile, considering both the expected behavioural and contractual maturities of liabilities, as well as the composition of counterparties. Therefore, the Authority expects applicants not to be reliant on funding from a narrow set of sources and to hold a buffer of high quality, unencumbered assets that can reliably be traded or exchanged in private markets, including in stressed circumstances as a mitigant to deposit runs. This buffer should enable them to withstand a wide range of severe but plausible stress.
Governance
FSPs are expected to establish and maintain an adequate and effective process of corporate governance that is consistent with the nature, complexity and risks inherent in the bank’s or mutual bank’s on-balance sheet and off-balance sheet activities and that responds to changes in the bank’s or mutual bank’s environment and conditions.
Applicants must satisfy the requirements set out in the relevant financial services laws and the relevant regulations regarding the composition and functioning of the board of directors/ trustees (board). It is the responsibility of each FSP’s board and management to manage the FSP prudently and observing standards of good market conduct, thereby contributing to the continued stability of the financial system, promoting the integrity of the financial system, ensuring fair competition in the interest of consumers and not engaging in abusive practices to consumers. Therefore, applicants must therefore also satisfy the FSRA that any person who holds the office of a director or an executive officer in an FSP is fit and proper.
The FSRA may consult other regulators regarding the suitability of personnel for the proposed FSP. FSPs are furthermore expected to have in place clear structures of accountability and delegation of responsibilities for individuals and committees, including checks and balances to prevent dominance by individuals. Senior individuals should remain accountable for the actions of those to whom they delegate responsibilities, including where FSPs use third parties in respect of outsourced functions.
Risk management and internal control systems
The FSRA places importance on FSPs managing risk effectively as it is the emerging of risk or concerns about risks emerging in the future that causes problems for the safety and soundness.
FSPs are therefore expected to have robust frameworks for risk management, financial and operational control, commensurate with the nature, scale and complexity of their business. Competent and, where appropriate, independent control functions should oversee these frameworks (internal and external auditing).
Compliance
The FSRA will assess whether an applicant’s compliance processes and systems are adequate and appropriate for ensuring compliance with set regulatory standards. In assessing whether the compliance processes and systems are adequate and appropriate for the applicant’s operations, the Authority will have regard to the size, nature and complexity of those operations.
Information and accounting systems
All FSPs are required to submit data to the FSRA. Therefore, applicants are required to demonstrate to the FSRA that their systems will be capable of producing all required information in an accurate and timely manner, from the commencement of their operations. Applicants must satisfy the FSRA that their information and accounting systems are adequate and fit-for purpose to support the business imperatives and other initiatives to be undertaken by the FSP.
The FSRA furthermore requires a detailed discussion on the applicants’ information technology (IT) systems and/or its proposed material outsourcing arrangements which must satisfy the FSRA’s outsourcing requirements. Focus should be placed on how the applicant plans to manage the risks emanating from the use of IT systems, how the applicant plans to manage the operational risks associated with its use of third-party suppliers and its plans for the monitoring and oversight of these arrangements.
Supervision by home supervisor
Applicants that are owned by foreign institutions must satisfy the Authority that they are subject to adequate prudential supervision in their home country.
In considering the standard of supervision exercised by the home supervisor, the Authority will have regard to the relevant international standards governing those sectors, e.g. IOSCO principles, Basel core principles on effective banking supervision, principles on financial consumer protection, FATF recommendations etc. Additionally, the applicant must obtain consent from their home supervisor to open operations in Eswatini.
Approvals of Key Persons
- All applicants are required to submit an application for approval of key persons in terms of Form 4 of Schedule 2.
- Application For Approval as Board of Directors, Chief Executive Officer, Compliance Officer, Money Laundering Officer:
- Letter from the principal of the representative.
- Board of Directors, Chief Executive Officer’s Application Form (Form 5_Licensing Rules).
- Applicant Curriculum Vitae.
- Police Clearance.
- ITC Report.
- Certified Copies of ID’s.