Latvia — Specialised Credit Institution Licence (€1M EU Banking Authorisation)
Latvia had not issued a new credit institution licence in more than a decade. Amendments to the Credit Institution Law that entered into force on 6 January 2026 changed that, creating a banking licence with an initial capital threshold of €1 million against the €5 million standard. It is a genuine banking authorisation — deposit-taking, lending, EU passporting. It is also a genuine banking application: granted by the European Central Bank, subject to identical requirements and an identical licensing process to a full bank. The capital is lower. Nothing else is.
A specialised credit institution is a Latvian banking licence requiring EUR 1,000,000 initial capital rather than the EUR 5,000,000 standard. It entered into force on 6 January 2026, is assessed by Latvijas Banka and granted by the European Central Bank, and is open only to applicants meeting one of three eligibility criteria: a limited customer base, digital-only delivery, or an innovative business model.
At a Glance
| Item | Detail |
|---|---|
| Initial capital | EUR 1,000,000 (vs EUR 5,000,000 standard) |
| In force since | 6 January 2026 |
| Assessing authority | Latvijas Banka |
| Granting authority | European Central Bank |
| Governing law | Credit Institution Law (Kredītiestāžu likums) |
| Licensing and review fees | None |
What It Is, and What It Is Not
A specialised credit institution is a credit institution. It accepts deposits and other repayable funds, issues credit in its own name, and provides other financial services. The exclusive right to accept deposits from natural and legal persons is what separates a credit institution from every other category of financial services provider — and it is the capability an EMI or payment institution can never have.
Two things must be stated immediately and plainly. First, Latvijas Banka's published position is that a specialised credit institution must comply with exactly the same requirements as a regular credit institution, and that the licensing process is identical. The differences are the initial capital threshold and the eligibility criteria. Supervisory standards, documentation, and process are not reduced.
Confirmed position — the ECB grants the authorisation. Latvijas Banka assesses the application and consults the ECB throughout, then submits a draft proposal. The ECB adopts the decision. A refusal by Latvijas Banka must also be consulted with the ECB and requires its agreement.
Supervision after authorisation
Because a specialised credit institution sits far below the significance thresholds of the Single Supervisory Mechanism, it will be a less significant institution — supervised day to day by Latvijas Banka, which assigns a curator, under ECB oversight and in cooperation with the ECB on supervisory matters. The ECB grants and can withdraw the authorisation; Latvijas Banka runs the ongoing supervision.
Eligibility — The Gate
To qualify, an applicant must provide the financial services listed in Section 1, Point 4 of the Credit Institution Law, and meet at least one of the following three criteria.
Limited customer base
Determined on a territorial, employment, or common-interest basis within the meaning of the Law on Credit Unions.
Digital-only delivery
Financial services provided exclusively through digital channels.
Innovative business model
Providing services that, on a national scale, represent a new or significantly improved financial service in Latvia.
Latvijas Banka has indicated the eligible models are cooperative or territorial banks with a limited customer base, fully digital banks and neobanks, and innovative financial services providers.
A conventional bank targeting the general Latvian market through branches does not qualify. The €1 million threshold is not a discount on the standard banking licence — it is a route reserved for three defined models.
What It Can Do
- •Accept deposits and other repayable funds from the public — the defining banking activity, unavailable to any EMI or payment institution
- •Issue loans and credit in its own name
- •Provide the full range of payment services
- •Provide the other financial services set out in Section 1, Point 4 of the Credit Institution Law
- •Passport across the European Union
Scope is set by the approved business plan. Authorisation is granted against the business plan submitted, so the permitted activity set is the one assessed and approved — not the full statutory list by default. An institution intending to add services later must notify Latvijas Banka of substantial changes or new services.
Crypto-asset services. Under MiCA, a credit institution may provide crypto-asset services by notification to its competent authority rather than obtaining separate CASP authorisation. This is a real structural advantage of the banking route over an EMI, which needs its own CASP authorisation — but it is a notification against an approved scope, not an automatic entitlement. Treat it as a reason to raise crypto activity at the pre-application stage rather than after licensing.
Capital — The Headline Number Is Not the Budget
- •Initial capital: EUR 1,000,000. Standard credit institution: EUR 5,000,000.
- •Capital is accumulated in an account opened at Latvijas Banka and transferred there.
- •But: on the day the licence is issued, there must be accumulated or reliably verifiable funds proving capital sufficient to ensure compliance with regulatory requirements for three years after the launch of operations, consistent with the business plan. Evidence of capital availability across the first three years must be provided during the licensing process.
€1 million is an entry threshold, not a funding plan. An applicant whose three-year business plan requires more capital to remain compliant must evidence that capital at authorisation. Applicants budgeting €1 million as their total capital commitment have misread the regime.
Ongoing costs
- •Supervisory fee to Latvijas Banka: up to 0.033% of average quarterly assets.
- •Deposit guarantee scheme. As a deposit-taker, the institution falls within Latvia's deposit guarantee framework under the EU Deposit Guarantee Schemes Directive, which protects eligible deposits up to €100,000 per depositor per institution and is funded by contributions from member institutions. Budget for contributions from launch.
The Five-Stage Process
Pre-application preparation
An introductory stage. Latvijas Banka meets the entrepreneur to discuss planned activities; the company need not yet exist. The applicant prepares information on prospective shareholders and officials, the envisaged capital amount and origin of funds, and a draft business plan meeting European Commission regulatory standards. Latvijas Banka advises on the framework, explains the decision-making process and deadlines within both Latvijas Banka and the ECB, assesses the initial business plan, and forms a view on whether the project is viable enough to continue. Free of charge.
Documents at this stage: CVs and completed FAP questionnaires for prospective officials; CVs of the 20 largest shareholders with financing amounts and origin of funds; information on planned capital financing, financial stability and wealth; and the draft three-year business plan with supporting capital documentation.
Submission
The application is submitted under Chapter 2 of the Credit Institution Law and Latvijas Banka Regulations Nos 259, 241, 343 and 371. Latvijas Banka assesses completeness within one month — but the final deadline depends on the ECB's own assessment of completeness. On acceptance, a project manager is assigned and the applicant is given access to a project management tool.
Practical warning: Latvijas Banka expressly cautions that the view on the granularity of file completeness can differ between Latvijas Banka and the ECB.
Assessment
Latvijas Banka and the ECB assess the substance jointly. Latvijas Banka consults the ECB and agrees a common stance. The applicant answers information requests from both, corrects documents on instruction from both, and attends meetings. Note that the project management tool does not reflect ECB activity — applicants tracking progress there are seeing only half the process. Latvijas Banka also expects the applicant's own representatives to attend meetings, not only its consultants.
Authorisation
Latvijas Banka completes its examination and submits a draft proposal to the ECB. The ECB adopts the decision and sends it to the applicant. Capital is transferred to the Latvijas Banka account. The applicant registers users for the Data Reporting System.
Supervision
Latvijas Banka assigns a curator, assesses ongoing compliance, examines reports, and cooperates with the ECB on supervisory matters. The institution must notify Latvijas Banka of changes to documents submitted for authorisation, of substantial changes or new services, and of material incidents.
Timing
Latvijas Banka begins examining the application within three months, and no longer than 12 months, from confirmation that the application is complete. That clock starts only once the file is accepted as complete — and completeness is assessed by both Latvijas Banka and the ECB.
No authorisation has yet completed under this framework, so there is no observed benchmark. On the basis of comparable EU credit institution authorisations, and given Latvijas Banka has itself identified underestimation of ECB timelines as a common applicant error, plan for 18–24 months from the first pre-application meeting to authorisation. This is a planning figure, not a regulator estimate, and should be treated as such.
Cost. Application preparation, advice, review, assessment and authorisation are all free of charge. This is genuinely unusual and worth stating — the cost of a Latvian banking licence is the work, not the fees.
Why Applications Fail
Latvijas Banka's Head of Licensing and Sanctions presented the specialised bank framework publicly in April 2026 and identified the pitfalls applicants repeatedly hit. These come from the assessing authority itself.
Unrealistic financial projections
Insufficient AML risk assessment
Inadequate IT cost forecasting
Incomplete fit-and-proper information for management
Underestimation of ECB involvement timelines
Everything can be improved except lack of capital and reputation.
Latvijas Banka, April 2026
Documentation
The volume of documentation is the reason banking applications fail, and it is the bulk of what an adviser actually does.
There are five core document groups: foundation documents; information on founders and shareholders; information on officials; the business plan; and outlines of base policies and procedures.
Governing instruments
- •Credit Institution Law, Sections 15, 16, 17 (foundation), 28–29 (shareholders), 24–25 (officials)
- •Latvijas Banka Regulation No 259 (Licensing, 27 November 2023)
- •Latvijas Banka Regulation No 241 (Acquisition or Increase of a Qualifying Holding, 22 May 2023)
- •Latvijas Banka Regulations Nos 342 and 343 (Fit and Proper — documents, and assessment, both 25 November 2024)
- •Latvijas Banka Regulation No 371 (Credit Institutions Management System, 16 December 2024)
- •Commission Delegated Regulation (EU) 2022/2580 — RTS on information in a credit institution authorisation application, and the content of the business plan
- •Commission Implementing Regulation (EU) 2022/2581 — ITS
- •EBA Guidelines on a common assessment methodology for granting authorisation under Article 8(5) of Directive 2013/36/EU
- •ECB guidelines on credit institution licensing
Policy outlines required at application stage
Only outlines are needed for licensing, but each must be fully prepared and approved before the institution can serve clients.
Plus a full description of IT infrastructure, hosting, IT function organisation, structure, strategy, governance, security policies, and controls for online banking.
Fit and Proper
- •Management board and supervisory board members and key function holders must have impeccable reputation, and education and experience adequate to manage a credit institution.
- •Shareholders holding 10% or more of share capital or voting rights — or a group each holding under 10% but acting in concert on management — must have good repute, professional experience, financial stability, and sufficient financial resources to support the institution's continued operation.
- •A legal person intending to lend to natural persons should consult the Consumer Rights Protection Centre.
The Honest Constraints
The ECB decides.
Plan for the process and duration of a European banking authorisation, not a national fintech licence.
Requirements are identical to a full bank.
Only the capital threshold and eligibility criteria differ.
Completeness views can diverge.
The completeness view can diverge between Latvijas Banka and the ECB, and the applicant-facing project tool does not show ECB activity.
Capital must cover three years.
Not merely meet the €1 million threshold.
Eligibility is gated to three defined models.
A conventional branch-based bank targeting the general Latvian market is outside the framework.
The ECB questioned the threshold itself.
In Opinion CON/2025/28 on the draft framework, the ECB encouraged the Latvian legislator to consider whether €1 million is a sound policy choice and suggested amendments to avoid undue risk build-up. Applicants should read this as a signal that the prudential assessment of capital adequacy will be scrutinised carefully, whatever the statutory minimum says.
Aggressive models attract deeper scrutiny.
(Planning assumption, based on the ECB opinion above and Latvijas Banka's stated pitfalls.) Business models relying on rapid growth, higher-risk assets, or complex cross-border flows should expect a harder assessment than the headline capital figure implies.
No track record.
The framework is new. As at March 2026, the Fintech Latvia Association reported that 3–4 market participants had entered consultations with Latvijas Banka. No authorisation has yet completed.
Latvijas Banka will not do the work.
Its published guidance states expressly that it will neither develop documentation on the entrepreneur's behalf nor improve the quality of documentation submitted, and that this is solely the responsibility of the entrepreneur and their advisers.
Comparison
| Specialised credit institution | Standard credit institution | EMI | |
|---|---|---|---|
| Initial capital | EUR 1,000,000 | EUR 5,000,000 | EUR 350,000 |
| Eligibility gate | Yes — one of three criteria | No | No |
| Deposit-taking | Yes | Yes | No |
| Lending in own name | Yes | Yes | No |
| Payment services | Yes | Yes | Yes |
| Crypto-asset services | By MiCA notification | By MiCA notification | Separate CASP authorisation |
| EU passporting | Yes | Yes | Yes |
| Granting authority | ECB | ECB | Latvijas Banka |
| Ongoing supervisor | Latvijas Banka (LSI) | Depends on significance | Latvijas Banka |
| Requirements and process | Identical to standard | — | Materially lighter |
| Capital evidenced for | 3 years per business plan | 3 years per business plan | Business plan |
| Deposit guarantee scheme | Yes | Yes | No |
An operator that needs e-money issuance and payment services but not deposit-taking should look at the Latvia EMI route. An operator that needs deposits and lending, fits one of the three eligibility models, and can carry a full banking application belongs here.
How Zitadelle AG Assists
- ✓Eligibility assessment against the three criteria
- ✓Business model structuring against Section 1, Point 4 of the Credit Institution Law
- ✓Pre-application engagement with Latvijas Banka
- ✓Three-year business plan and capital adequacy modelling to Delegated Regulation (EU) 2022/2580 standards
- ✓The full policy and procedure suite
- ✓Fit-and-proper preparation for board members, supervisory board and key function holders
- ✓Qualifying holding documentation under Regulation No 241
- ✓Managing information requests from both Latvijas Banka and the ECB
- ✓Post-authorisation readiness
Related support: Compliance & Advisory, Legal Services, and Latvia company formation.
Frequently Asked Questions
The European Central Bank grants the authorisation. Latvijas Banka assesses the application, consults the ECB throughout, and submits a draft proposal, after which the ECB adopts the decision and sends it to the applicant. A refusal by Latvijas Banka must also be consulted with the ECB and requires its agreement. Applicants should plan for a European banking authorisation, not a national fintech licence.
Do you meet the eligibility gate?
Eligibility against the three criteria is the first question, and it determines whether a specialised credit institution application is available to you at all.
Related Licences
Latvia EMI Licence
EUR 350,000 capital, granted by Latvijas Banka. E-money issuance and payment services without deposit-taking — materially lighter requirements and process.
View detailsLithuania EMI Licence
The established Baltic EMI alternative. Bank of Lithuania authorisation with EU passporting for e-money and payment services.
View detailsLatvia Company Formation
The underlying Latvian corporate structure — foundation documents under Credit Institution Law Sections 15, 16 and 17.
View detailsQuick Facts
Disclaimer: This page is for informational purposes only and does not constitute legal, tax, or regulatory advice. Latvijas Banka and ECB requirements may change. Last updated: April 2026.
Regulatory positions on this page are verified against Latvijas Banka's published credit institution authorisation guidance, the Credit Institution Law, and ECB Opinion CON/2025/28.