Specialized Bank License
in Latvia
Latvia has recently made its banking framework more accessible for certain digital, focused, and innovation-led financial-service models. Through the specialized credit institution regime, some founders may now have a more realistic way into a regulated credit institution structure than through the more traditional banking routes available elsewhere in Europe.
For founders who want a stronger regulatory base without starting from the heaviest possible structure, this can be an attractive option. Depending on the project, it may provide a credible path towards a banking structure with stronger regulatory standing, broader strategic potential, and better support for long-term growth.
Regulations for Specialised Bank license in Latvia
The regulation of specialized credit institutions (SCI) forms part of the general banking regulatory and supervisory framework in Latvia. The SCI model has been created for certain specialized business models and may therefore be viewed as one of the available authorization routes. The main authority involved in the SCI licensing process at national level is Bank of Latvia (Latvijas Banka). The final decision on authorization is made through the ECB process. This means the SCI route forms part of the broader European banking authorization structure and is not simply a simplified domestic regime.
The legislative basis for the SCI route is primarily established by the Credit Institutions Law. That law provides the basis for specialized credit institutions, which are recognized as credit institutions with certain characteristics linked to their operation due to their specialization in carrying out particular types of business activity. In addition, the SCI process is supported by Latvijas Banka’s Credit Institutions Licensing Rules, together with the applicable EU banking rules relating both to authorization and to prudential assessment.
Licensing Requirements
Licensing Requirements
The specialised credit institution will be subject to the same high standards for approval as other credit institutions operating within the Latvian banking sector. This means the applicant will need to show that it has sufficient resources and capabilities to commence operations from day one, including an effective business plan, a clearly defined ownership structure, an appropriate management team, sound corporate governance, and capital provision that reflects the true scope and risk profile of the proposed model.
1. Authorization as a credit institution
The SCI route is not a separate non-bank license. SCI licensing forms part of the same credit institution regulatory framework as licensed banks and will therefore be assessed as such.
2. Qualifying specialized model
To use the specialised credit institution route, the project must fit the legal SCI criteria. In broad terms, the regime is intended for certain specialised models rather than a general one-size-fits-all bank concept. This is one of the main reasons the route is commercially attractive, but the business model still needs to be credible and properly evidenced in the application.
3. Business plan and strategic rationale
The applicant must submit a properly developed business plan supported by financial forecasts, assumptions, and operating logic. The supervisor is not only checking whether a plan exists, but whether the model is viable, sustainable, and realistically implementable. Over-optimistic market assumptions, weak projections, or unclear strategic positioning are among the issues specifically flagged by the regulator as common weaknesses in licensing files.
4. Shareholders and ownership transparency
The ownership structure must be transparent and supportable. Founders and investors should be ready to evidence source of funds, financial standing, strategic intentions, and the wider group structure where relevant. This is often one of the more sensitive parts of the file, especially for international shareholders or where the proposed ownership chain is complex.
5. Management and governance
The application must include suitable management and a governance structure capable of supporting a credit institution. This includes fit and proper assessment of relevant officials, collective suitability of the management board, and a governance model that works in practice rather than only on paper. For founders, this means that management buildout and governance design are core licensing pillars, not post-approval formalities.
6. Capital planning and prudential readiness
The specialised route benefits from a lower statutory starting threshold than the standard bank route, but the actual capital assessment goes beyond the nominal entry figure. The regulator will look at the business plan, projected losses, risk profile, and prudential needs over the first years of operation. As a result, capital planning needs to be built around the real substance of the model rather than the minimum threshold alone.
7. Internal controls, risk, and operating setup
The institution must have a workable control environment, including risk management, AML controls, internal governance, continuity planning, and an operating structure that supports the proposed activities. This is particularly important where the model is digital, outsourced, or innovation-led, because the regulator will still expect the institution to remain governable and prudentially manageable from day one.
Ongoing Compliance
Ongoing Compliance
After authorisation, a specialised credit institution is subject to continuous prudential supervision. As such, it shall continually operate according to its authorised business model, governance structure, and reporting schedule. In addition, it must establish and maintain ongoing contact with Latvijas Banka (the regulator) for supervisory purposes.
The credit institution will have to submit periodic reports and other supervisory information as required by the regulator.
In the event that there are material changes to the institution’s ownership, management, organizational structure, products or services offered, or operating model, this may need to be notified to the regulator, which can potentially lead to a reassessment or further regulatory review of the institution’s compliance status.
Following authorization, the institution will also have to maintain the same standards of governance, internal controls, and management that existed at the time authorization was granted.
Its risk management system, internal controls, governance framework, and operational processes shall be proportionate to both the size and nature of the activities performed by the credit institution after launch.
Should the credit institution make changes to its business model, extend its range of activities, or undergo some form of restructuring, it may be required to update internal documentation, enhance internal control mechanisms, and take into consideration new regulatory expectations.
Recent Developments
The most recent important development in Latvia’s banking sector is the updated specialized credit institution regime. The revised framework is intended to allow access to the banking market for certain specialized models and to support the further development and competitiveness of the Latvian financial sector. At the same time, the regulator’s position makes clear that the quality of the application remains critical. This includes the realism of the business model, the adequacy of capital planning, the quality of governance, and the institution’s readiness for implementation.
Legalaes continues to monitor developments in Latvian and EU banking regulation and helps clients assess whether the specialised credit institution route is genuinely workable for their model, ownership structure, and long-term regulatory strategy.
What services can be provided through a Specialized Credit Institution in Latvia
| Financial service | Description of service |
|---|---|
| Acceptance of deposits and other repayable funds | Receiving deposits or other repayable funds from clients as part of the institution’s banking model, subject to the authorised structure and prudential requirements. |
| Lending and credit issuance | Providing loans or other forms of credit in the institution’s own name, including models where lending is one of the main commercial activities of the business. |
| Digital banking services | Offering banking services through digital channels, including app-based or platform-based customer interaction and account-related banking functionality within the approved model. |
| Payment and account-related services | Supporting payment flows, account use, and related banking functionality where these form part of the approved credit institution model and operating structure. |
| Focused customer-segment banking | Providing banking services to a defined group of customers, including projects built around a particular market segment, business community, or other focused client base. |
| Innovative financial services | Delivering a financial-service model that is new or significantly improved for the Latvian market, where the innovation is built into the institution’s business concept and licensing file. |
| Other banking services included in the programme of operations | Providing other banking services that are clearly reflected in the institution’s programme of operations and supported by the approved business model, governance setup, and operating structure. |
Overview of requirements to obtain a Specialised Credit Institution authorisation in Latvia
- Latvian legal entity prepared to apply as a credit institution.
- Business model that fits the specialised credit institution route.
- Authorisation process through Latvijas Banka within the broader ECB framework.
- Properly developed business plan with financial forecasts and implementation logic suitable for central bank review.
- Transparent ownership structure, source-of-funds information, and shareholder documentation.
- Suitable management board and key function holders.
- Governance structure capable of supporting a prudentially supervised institution from launch.
- Initial capital of at least EUR 1 million, with broader capital planning depending on the scale and risk profile of the model.
- Internal controls, risk management, AML framework, and operational readiness. Complete application package aligned with the Latvian and EU banking framework.
Other considerations depending on the business model
- International or layered ownership structures may require deeper qualifying-holding analysis.
- Less conventional models may require stronger justification of commercial logic and implementation readiness.
- Broader banking functionality may require stronger capital planning and governance buildout from the outset.
Estimated time frames
Project analysis and review
1-3 weeks
Company Incorporation
1-2 weeks
Preparation of Required Documentation
3–5 weeks
Establishing Minimum Capital Requirements
1–2 weeks
Appointment and Vetting of Qualified Management and AML Officer
1–2 weeks
Submission of SCI License Application to the Bank of Latvia
2–4 months*
Regulatory Dialogue and Possible Additional Documentation Requests
4–10 months
* The timeline also depends on the workload of Bank of Latvia and any clarifications and queries that BoL may request in relation to the application
Legal Services for obtaining a Specialised Bank license in Latvia
Basic package
- Company registration under Latvian law
- Registered legal address for 1 year
- SCI route suitability review
- Business model and licensing logic review
- Shareholder and management document review
- Review of draft financial and governance materials
- Preparation of the licence application file
- Finalisation of the application package
- Legal coordination during licensing
- Communication support during regulator review
Full Preparation and Licensing Support Package
- Development of core shareholder and governance documentation
- Business plan drafting and supporting narrative
- Financial forecasts and licensing assumptions
- Governance and operational model development
- Internal policy and control documentation
- Organisational structure and key function design
- Broader legal support throughout the SCI licensing project
Additional Services
- IT, outsourcing, and operational setup review
- Assistance with local staffing or outsourced solutions
- Introductions to relevant institutions, providers, or infrastructure counterparties
- Additional legal and strategic support during implementation
Jegor Kupratsevits
Head of Fintech
EMI vs Specialised Credit Institution vs Traditional Bank
| Function / feature | EMI | Specialized Credit Institution | Traditional Bank / Credit Institution |
|---|---|---|---|
| Payment services | Yes | Yes, where built into the approved model | Yes |
| Client accounts / account functionality | Yes | Yes | Yes |
| Electronic money and safeguarding model | Yes | No | Yes |
| Accepting deposits or other repayable funds | No | Yes | Yes |
| Use of received client funds in the business model | No | Yes | Yes |
| Lending in own name | Limited | Yes | Yes |
| Best suited for | Payments, wallets, e-money, lighter fintech models | Growing fintechs, digital banking, focused or innovative banking models | Broad banking strategy and full-scale banking scope |
| Typical point at which founders consider this route | When the business is mainly payment-focused | When the EMI model becomes too narrow but a full bank is still too heavy | When broad banking scope is needed from the outset |
Detailed requirements for Specialized Credit Institution license in Latvia
List of Required Documents
- Corporate and application documents:
- Documentation for the authorisation process for credit institutions in Latvia
- Constitutional and registration documents of the applicant company
- Ownership structure chart and supporting shareholder documentation
- Additional application materials as requested by Latvijas Banka and, where applicable, within the broader ECB authorisation process
- Shareholder / controller documentation:
- Identification documentation, background documentation, and source of funds documentation for shareholders and controllers
- Information concerning strategic objectives, financial standing, and group structure where applicable
- Supporting documentation relating to ownership and control of the institution.
- Business plan and business model documentation:
- Business plan including financial forecasting and implementation approach
- Description of the proposed services, target client groups, and proposed operational model
- Description of how the institution is expected to operate after launch.
- Governance, risk and internal controls documentation:
- Governance documentation appropriate for the proposed model
- Internal controls and risk management documentation
- AML, continuity, and operational controls documentation where relevant.
- Technical / operational documentation:
- Description of the institution’s organisational structure and allocation of responsibilities
- IT, outsourcing, and continuity documentation where relevant to the proposed model
- Other supporting documentation depending on service model and regulatory expectations
Capital requirements and government fees
- Minimum initial capital for a Specialised Credit Institution: EUR 1 million
- Actual capital expectations may be higher depending on the proposed model
- Capital planning should reflect the business plan, forecasted losses, and prudent needs of the institution
- More detailed capital planning may be needed when the proposed model involves increased lending activity, greater use of the balance sheet, or broader banking functionality
- The SCI authorisation process requires more effort than lighter financial services registration procedures
- Company formation costs, document preparation costs, implementation costs after authorisation, and ongoing supervisory costs should be expected.
Personnel Requirements
- Management Board with sufficient reputation, expertise, and experience for a prudentially regulated credit institution
- Management structure able to oversee governance, risk, compliance, and operations
- Workable personnel structure surrounding the institution, with responsibility clearly assigned and supported in the operating model*
- Where the structure relies on outsourcing or a smaller local team, responsibilities should still be clearly assigned and workable in practice.
Business Premises Requirements
- Registered address in Latvia for the applicant institution
- Operating setup credible for the proposed model
- Where the model relies on local substance, outsourced functions, or a smaller physical presence, the overall structure should still be supportable from a governance and supervision perspective
As a starting point, the institution should normally be able to cover the main management, control, and operational functions expected for a prudentially supervised credit institution. Depending on the business model, this typically includes:
- Management board / executive management
- Risk management
- Compliance and AML oversight
- Internal audit
- Finance / financial control
- Operations / day-to-day institutional management
- IT and security oversight, where the model is digital or materially outsourced
The final structure depends on the business model, scale, outsourcing approach, and regulator comfort with the proposed setup. If you are not sure which functions need to be covered inside the institution and which can be supported through outsourcing or a leaner structure, contact our team and we can assess the most realistic setup for your project.
Roadmap to setup Specialized Bank in Latvia
Jegor Kupratsevits
Head of Fintech
Analysis and route confirmation
The process begins by determining whether the proposed business model is genuinely suitable for the specialised credit institution route and whether it is likely to pass prudential review. At this stage, the business model, ownership structure, capital rationale, services to be provided, and general regulatory position of the project are reviewed together. This is also the phase in which the likely institutional structure, possible gaps in the project, and the expected complexity of the licensing process are identified before moving forward.
Institutional structuring and company formation
Once the route has been confirmed, the institution is structured in a way that can support a genuine SCI application. This phase includes registration of the company, establishment of the ownership structure, early planning of the management board, development of the capital base of the institution, and the first key decisions regarding local presence, personnel, outsourcing, and operational model. By the end of this phase, the project should have a workable structural basis for preparing the license file.
Preparation of business plan, policies, and licensing package
After the structure has been created, the core licensing package is prepared. This includes the business plan, financial forecasts, shareholder and management information, source-of-funds documentation, governance and control materials, operational and IT descriptions, and the other documents required for submission. During this phase, the internal policies and control framework are aligned with the actual model of the institution rather than being prepared separately from it.
Initial Meeting with Latvijas Banka
The Applicant may meet with Latvijas Banka once the Business Plan and the first Core Documents have been prepared. This gives the Applicant the opportunity to introduce the proposed Model, discuss the Project with the Regulator, and identify whether there are still elements of the File that require improvement prior to making the Formal Application.
After the initial meeting, it is normal for the Institution to address the comments received from Latvijas Banka and make the necessary improvements to the Compliance and Governance Package, as well as put in place any additional staff, support functions, or practical arrangements required for the Project.
Review of shareholders and investors, banking arrangements, and staffing build-out
Before the formal application is submitted, the project should be brought closer to operational readiness. This usually includes continued review of shareholder and investor materials, progress on banking arrangements for the entity, further development of the staffing model, and practical work on the institution’s operational setup. At this stage, likely suitability issues, ownership issues, source-of-funds issues, management readiness issues, and operational structure weaknesses should already be identified and addressed as far as possible before submission.
Formal application submission and regulatory review
Once the licence file has been finalised, the formal application is submitted and enters the regulatory review process. Latvijas Banka first carries out a completeness assessment of the file, after which the file moves into substantive assessment together with the European Central Bank. In practice, this phase usually involves multiple rounds of questions, clarifications, discussions, document updates, and further work relating to implementation matters of the institution. The speed at which the project progresses through this phase depends largely on how well the institution was prepared during the earlier phases.
Authorization and launch
After completion of the examination process, Latvijas Banka prepares its draft recommendation proposal and the ECB makes the final decision regarding authorisation. Following authorisation, the institution moves into final implementation activities, including completion of capital funding, setup of reporting systems, completion of operational preparations, and launch according to the approved model. Once authorised, the SCI becomes subject to ongoing prudential supervision and is expected to operate in accordance with the governance, control, and business model on the basis of which the authorisation was granted.
Detailed Time Frames to obtain a Specialised Credit Institution authorisation in Latvia
Overall, the SCI process should be considered to be an organizational development project, rather than just a submission of documents. The total timeframe for the SCI authorization process can vary based on the design of the project, the completeness of the documents prepared, and the readiness of both the shareholders and the management team. Additionally, the speed at which reviewer comments are addressed by the applicant can greatly influence the final timeframe. Below is a general guideline of the typical timeframes experienced with respect to each phase of the SCI authorization process in Latvia.
1. Project analysis and route confirmation
Time Frame: 1-3 weeks
At the beginning of the process, the proposed business model, ownership structure, capital logic, and service scope are reviewed in order to determine whether the SCI route is workable. This stage is also used to identify the main project gaps and the likely level of licensing complexity.
2. Company setup and institutional structuring
Time Frame: 2-6 weeks
Once the route is confirmed, the Latvian company is incorporated and the wider institutional structure is developed. This stage usually includes ownership structuring, early capital planning, development of the management-board and governance concept, and the first practical decisions on local presence, staffing, outsourcing, and operating model.
3. Business plan, policies, and licensing package preparation
Time Frame: 6–12 weeks
This stage is often one of the most substantial parts of the process. During this time, the business plan, financial projections, source-of-funds documents, governance documents, operational description, and the wider application package are prepared and brought together into one coherent filing position.
4. Preliminary meeting with Latvijas Banka and implementation of comments
Time Frame: 2–6 weeks
It is possible to have preliminary discussions with Latvijas Banka regarding the proposed project model prior to submitting a complete application. A preliminary discussion can help assess whether the proposed model is acceptable to Latvijas Banka at an early stage. It can also help identify issues in the file, such as governance arrangements, documentation deficiencies, or staffing matters, that should be addressed before the formal review process begins.
Following comments from Latvijas Banka regarding the proposed model, there may be further work to undertake by the applicant. This could include developing the governance arrangements, completing certain elements of the documentation package, and/or refining the staffing model.
5. Bank account opening, shareholder readiness, and staffing build-out
Time Frame: 3–8 weeks
At this stage, the institution usually moves closer to operational readiness. This commonly includes progress on opening a bank account for the entity, refinement of the staffing model, review of shareholder readiness, and strengthening of source-of-funds positioning and management suitability before submission.
6. Submission of the SCI application
Time Frame: 1–2 weeks
Once the SCI application has been completed, it is submitted to Latvia’s central bank, Latvijas Banka. The submission is the first step in the formal authorization process, and the focus at this stage is on ensuring that the application package includes all necessary documents and is organized clearly enough for timely review.
7. Completeness review by Latvijas Banka
Time Frame: up to 1 month
After submission, Latvijas Banka first reviews whether the application file is complete. This is the first screening stage. Its purpose is to determine whether all essential parts of the package have been provided and whether the file is clear enough to move forward.
At this stage, if anything requires correction, supplementation, or clarification, the applicant may be asked to address those points before the application moves into substantive assessment.
8. Substantive assessment by Latvijas Banka and the ECB
Time Frame: 3–12 months after completeness, depending on the file
This is the main review stage of the process. During this period, the business model, shareholders, management, governance framework, capital logic, and implementation readiness are reviewed in substance.
The institution should normally expect comments, clarification requests, or requests for additional information during this stage. In some cases, additional meetings or follow-up rounds may also be required. The total duration will depend on the complexity of the submitted file, the quality of the initial filing, and the speed at which responses are provided.
9. Authorization, final implementation, and launch
Time Frame: 2–6 weeks after approval, depending on readiness
Once the institution has been authorized, it moves into final implementation. This usually includes completion of capitalization, reporting setup, and other operational steps necessary before launch in line with the business plan approved by the regulator.
At that point, the institution enters ongoing prudential supervision. The institution is therefore expected to maintain the same level of structural framework, governance arrangements, and regulatory controls as were in place when authorization occurred.
Total indicative timeline: ~12–24 months from project start, depending on file quality, responsiveness, and business model complexity.
Factors influencing time frames
The overall timeframe of the SCI process in Latvia will usually depend on a number of project variables. These include:
- the maturity and realism of the business model
- the readiness of shareholder and source-of-funds materials
- the strength of the management board and key function holder setup
- the quality and consistency of the business plan and governance documentation
- the speed of response to regulator comments and clarification requests
Advantages of SCI in Latvia
01
Lower capital requirement compared to a standard bank route
One of the biggest advantages of the Latvian SCI route is the lower legal initial capital requirement compared with the standard bank route. For some projects, this can create a more accessible way into the banking sector, especially where the model is specialised rather than being designed as a full-service traditional bank from day one.
02
A route built for innovation
The SCI route in Latvia was created to provide a more workable route for certain specialised business models, especially those that are digital or innovation-led. Because of this, it can be particularly relevant for founders whose model does not fit the standard full-bank concept, but who still require a real banking structure around the business.
03
Lower set-up costs compared to larger financial hubs
Although any SCI project still needs real substance, governance, and a proper institutional foundation, Latvia may offer a less expensive base than some of the larger financial centres in Europe. This can make a real difference when planning for management, key functions, governance, compliance, and the ongoing cost of maintaining the institution.
04
Next step for EMIs
For some founders, SCI becomes relevant when the EMI model is no longer enough for the intended next stage of growth. Where the business needs deposits, own-balance-sheet lending, or stronger banking positioning, the SCI route can become a more suitable institutional step than remaining within the EMI perimeter.
05
Clear entry path
The SCI framework gives qualifying projects a more commercially realistic path into the banking space than the standard traditional bank route. For well-prepared institutions, this creates a clearer route to building a banking platform without starting from the heaviest possible structure from day one.
06
Structured licensing process
Latvia’s published process gives founders a clear staged route into the SCI authorisation process, including preparation, preliminary engagement, formal submission, completeness review, substantive assessment, and launch. For projects that are prepared properly, this makes the path into the banking sector more structured and easier to navigate from an execution perspective.
Links for legislation related to SCI in Latvia
The main legal basis governing credit institutions in Latvia, including the broader banking-law framework within which the SCI route operates.
The 2026 SCI reform introduced the updated specialized credit institution framework and reduced the statutory initial-capital threshold for qualifying SCI projects.
This is the main Latvian licensing regulation for obtaining a credit institution license and certain related permissions. It is one of the main practical sources for understanding what must be included in the SCI application file.
This regulation covers the acquisition or increase of a qualifying holding in a financial institution. It is especially relevant for SCI projects involving international investors, layered holding structures, or shareholder control review.
This regulation sets out the documents to be submitted for the assessment of the suitability of credit institution and investment firm officials. It is one of the key sources for management-board and function-holder filing requirements.
This regulation governs the substantive suitability assessment of credit institution and investment firm officials. It is a key legal source for fit and proper expectations, collective suitability, and the wider credibility of the institution’s personnel structure.
This regulation covers the management system of credit institutions and is one of the main sources for governance, internal controls, allocation of responsibilities, and organizational structure.
These guidelines explain the common assessment methodology used when reviewing an application for authorisation as a credit institution, including business model, governance, capital, and ownership assessment in substance.
Taxation of SCI Companies in Latvia
The tax position of a specialised credit institution (SCI) in Latvia should be reviewed separately from the tax position of an ordinary Latvian company. While Latvia is generally known for its profit-distribution-based corporate tax system, credit institutions are subject to an additional annual corporate income tax surcharge. For that reason, the tax position of an SCI should be reviewed by reference to the institution’s profit distribution policy, payroll structure, VAT treatment of its actual services, and the wider way in which the institution will operate.
Corporate Income Tax
Corporate Income Tax
Latvia’s general corporate income tax system is based on taxing distributed profits rather than retained earnings. Retained profits are generally not taxed under the usual Latvian corporate income tax model while they remain in the company.
At the same time, credit institutions in Latvia are subject to an annual corporate income tax surcharge of 20%. Therefore, the usual Latvian “0% on undistributed profits” message should not be viewed in the same way for SCI projects as it would be for an ordinary Latvian company.
Dividend Distributions and Profit Distribution
Dividend Distributions and Profit Distribution
- Distributed profits are taxed at company level under Latvia’s standard corporate income tax system using the usual 20/80 approach.
- When reviewing the tax treatment of dividend distributions by credit institutions, the annual surcharge should also be taken into account, except in the case of extraordinary dividends.
- For that reason, profit distribution should be reviewed together with the annual surcharge instead of being treated in the same way as profit distribution by a normal Latvian company.
Wage Taxes and Wage Costs
Wage Taxes and Wage Costs
- In Latvia, personal income tax is 25.5% on annual taxable income up to EUR 105,300 and 33% on annual taxable income above that amount. An additional 3% rate applies to annual income above EUR 200,000.
- Mandatory social insurance contributions total 34.09%, of which 23.59% is paid by the employer and 10.5% by the employee.
- If the SCI model includes local management, compliance employees, risk staff, finance staff, or other institutional personnel in Latvia, those payroll costs should be taken into account from the beginning as part of the operating budget of the institution.
VAT on SCI Services
VAT on SCI Services
- The standard VAT rate in Latvia is 21%.
- Most core financial service income may fall within the normal VAT exemption rules for financial services. However, not all SCI-related income should automatically be treated as VAT-exempt. Ancillary services, technology components, advisory services, administrative fees, or separate platform revenues may still need to be reviewed individually for VAT purposes.
- Each revenue source should therefore be checked separately before assuming that all SCI-related income is automatically VAT-exempt.
Accounting and Tax Compliance
Accounting and Tax Compliance
An SCI should prepare for full corporate accounting, annual tax compliance, payroll compliance where local employees are hired, and proper documentation of operating expenses and related-party expenses.
Tax planning for an SCI should be carried out together with the regulatory structure and operational setup of the institution rather than reviewed as if the company were a standard Latvian commercial entity.
FAQ about SCI license in Latvia
Can an EMI upgrade into a specialised credit institution in Latvia?
Yes. For some businesses, this can be a logical next step. The SCI route may become relevant when the EMI model is no longer sufficient for the next stage of growth, especially where the business needs deposits, lending in its own name, or a stronger banking position.
Is SCI in Latvia only suitable for EMI businesses?
No. The SCI route can also be relevant for founders building a credit institution from the outset, especially where the model is specialised, digital, or focused on a defined customer segment.
Who is SCI in Latvia most suitable for?
SCI in Latvia is generally most suitable for digital banking concepts, niche banking models, focused customer-segment businesses, and founders who need a real credit institution route without starting immediately from a broad traditional bank model.
What is the main difference between an EMI and an SCI?
An EMI is generally used for payments, e-money, and related financial infrastructure. An SCI is a credit institution route and becomes more relevant where the model requires deposits, lending in its own name, or broader banking functionality.
Can a specialised credit institution in Latvia accept deposits and lend in its own name?
Yes. This is one of the main points that distinguishes an SCI from an EMI structure and one of the main reasons why the SCI route may become relevant for businesses moving towards a real banking model.
Is EUR 1 million always enough for an SCI in Latvia?
No. EUR 1 million is the statutory minimum starting point. However, the actual capital expectation may be higher depending on the business model, projected losses, and prudential needs of the institution.
Do I need a full local team from the beginning?
Not always. However, the institution will still need to show a credible management, control, and operational structure from the licensing stage. The exact staffing model will depend on the project, the outsourcing model, and the regulator’s view of the proposed setup.
Can foreign founders or investors use the SCI route?
Yes. However, the ownership structure, source of funds, and overall shareholder profile will need to be transparent and capable of passing regulatory review.
Each of our projects receives unique and tailored solutions in accordance with the initial objectives and vision of the shareholders.
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