The banking industry, a fundamental pillar of our modern economy, is subject to strict regulation. This regulation is justified by the need to protect depositors and ensure the stability of the financial system.
Why do I need approval?
The banking licence is the cornerstone of supervision of the financial sector. It is a compulsory administrative authorisation to carry out regulated banking and financial activities.
Article L. 511-10 of the French Monetary and Financial Code defines authorisation as the sine qua non for carrying out banking transactions. This requirement stems from a dual imperative: to protect public savings and to guarantee the stability of the financial system.
The Cour de cassation, in a decision of the plenary session of 4 March 2005, emphasised the importance of this approval, while specifying that its absence did not automatically lead to the nullity of contracts concluded by the unapproved establishment.
The different categories of credit institution
The French banking landscape is characterised by a diversity of players with different legal statuses.
Universal banks
These institutions can carry out all types of banking transactions. They represent the traditional model of the commercial bank, capable of collecting deposits, granting loans and managing means of payment.
Cooperative and mutual banks
Crédit Agricole, Banques Populaires, Crédit Mutuel - these mutual and cooperative networks account for a significant proportion of the French banking market. What makes them special? They are owned by their members, not by traditional shareholders.
Article L. 512-1 et seq. of the French Monetary and Financial Code specifically governs their operation.
Financing companies
Introduced by Order no. 2013-544 of 27 June 2013, these entities are defined in Article L. 511-1 of the French Monetary and Financial Code as "legal entities, other than credit institutions, which carry out credit transactions on their own behalf and as a regular part of their business".
They cannot take deposits from the public, which is what distinguishes them fundamentally from banks.
Specialised credit institutions
These structures may only carry out the banking transactions mentioned in their authorisation or resulting from their own legislative provisions. This category includes the former specialised financial institutions.
Conditions and procedure for approval
The authorisation process is strictly regulated by the Autorité de contrôle prudentiel et de résolution (ACPR).
Financial requirements
The minimum capital required varies according to the type of establishment:
- 5 million for banks and mutual banks
- Variable amounts for other types of establishment
This minimum capital requirement, set out in article L. 511-11 of the French Monetary and Financial Code, is intended to guarantee the financial soundness of the institution.
Requirements for directors
The "four eyes" - this is the rule that requires the institution to be managed by at least two people. They must be of good repute and have the necessary skills and experience, as required by article L. 511-10 of the French Monetary and Financial Code.
A simple ACPR check on criminal records? Not just that. The assessment of skills is particularly thorough.
Quality of capital providers
The regulations require a meticulous examination of the identity and status of qualifying shareholders. This verification is part of a preventive approach against money laundering.
Technical and human resources
The establishment must demonstrate its operational capacity to carry out the planned activity. This means having suitable premises, secure IT systems and qualified staff.
The "European banking passport
A major innovation in European banking law, the European passport enables an institution authorised in one Member State to operate throughout the European Union.
Principle of mutual recognition
This principle, enshrined in Directive 2000/12/EC and then Directive 2013/36/EU, enables a banking institution authorised in one Member State to benefit from automatic recognition of its authorisation in the other Member States.
Monitoring by the State of origin
Prudential supervision remains the responsibility of the home state, in accordance with the principle of "home country control". This rule can create tensions if supervisory standards vary between Member States.
In case C-452/04 of 3 October 2006, the ECJ clarified that Community law did not prohibit the requirement of national authorisation for the granting of credit by a company established in a third country.
Withdrawal and absence of authorisation: legal consequences
Withdrawal of authorisation may occur at the request of the institution or be decided by the ACPR. Possible causes include failure to comply with the initial conditions for authorisation or prolonged inactivity.
Article L. 511-15 of the French Monetary and Financial Code sets out the terms and conditions of this withdrawal, which generally entails the liquidation of the institution.
As for the absence of authorisation, although it constitutes a criminal offence (article L. 571-3 of the Monetary and Financial Code), it does not systematically invalidate the contracts entered into, according to the established case law of the Court of Cassation, notably in the rulings of 28 November 2006 and 3 July 2007.
The Commercial Chamber of the Court of Cassation reiterated this point in a ruling dated 15 June 2022 (no. 20-22.160): "The mere fact that a credit transaction has been entered into in disregard of this prohibition is not such as to render it void".
Why should this be? Because nullity would indirectly punish the customer who is seeking protection under banking legislation.
Sources
- Monetary and Financial Code, articles L. 511-1 to L. 511-17, L. 571-3, L. 512-1 et seq.
- Order no. 2013-544 of 27 June 2013 on credit institutions and finance companies
- Directive 2013/36/EU relating to the taking up and pursuit of the business of credit institutions
- Cass. ass. pl., 4 March 2005, no. 03-11.725
- Cass. com. 28 November 2006, D. 2007. AJ 13
- Cass. com. 3 July 2007, D. 2007. AJ 2029
- Cass. com. 15 June 2022, no. 20-22.160
- ECJ, 3 October 2006, case C-452/04
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