Business scope and permission boundaries
A mutual deposit-taking institution centred on members' savings and residential finance, with specific rules on organisation, promoters, funding sources, capital and liquidity—not an ordinary construction or property company.
A building society is a mutual institution whose statutory principal purpose is to support residential mortgage lending funded primarily by its members, not an ordinary building contractor. Under Schedule 2 to the 1986 Act, at least ten founders may establish one in accordance with the rules and register it with FCA, but registration does not replace PRA deposit-taking authorisation and FCA consent.[12]
Application value and choice of route
Select the minimum sufficient combination of permissions that lawfully supports the actual business, client scope and financial responsibilities, rather than treating the broadest permissions or fastest approval as the sole objective.
Within approved activities and restrictions, a bank may accept deposits and build savings, transaction account and lending businesses around permitted products. Where mortgages, investments or other regulated activities are also involved, the specific permission must be checked; deposit-taking permission must not be interpreted as covering all financial business.[1] [2]
Eligible deposits receive FSCS deposit protection, with a general limit from 2025-12-01 of £120,000 per depositor, per PRA-authorised institution. This arrangement helps maintain depositor confidence, but not all customers, products or accounts are protected, and multiple brands under the same institution generally have to be aggregated.[5]
New banks may choose to launch fully from the outset, or first obtain authorisation with restrictions and enter mobilisation to put staff, systems and funding in place. Pre-application discussions and mobilisation arrangements can help manage the sequence of development, but regulators are not business advisers and do not guarantee approval or the timely removal of restrictions.[1] [6]
Application conditions and entry requirements
A compliant memorandum and rules must be submitted and member governance maintained. Lending and funding portfolios are also subject to specific legislation. Lending limits are calculated on the statutory business asset basis, generally requiring residential mortgage loans to cover at least 75% of the relevant measure, rather than simply 75% of total assets. Funding limits generally require at least 50% of relevant funding to come from individual members' shares, subject also to statutory calculation adjustments.[12] [24] [25]
Shareholders, directors and key personnel
Shareholders and controllers must disclose the complete ownership chain, ultimate owners, sources of funds and group relationships; regulators assess their fitness and impact on the bank’s safety and soundness. Foreign investors are not automatically excluded, but complex or opaque group structures, overseas laws preventing access to information and inability to demonstrate actual capital availability may all affect effective supervision and approval.[6] [10]
The board should have experience matching the bank's products and risks, with evidence of its ability to challenge management independently. When approving senior management functions, PRA considers integrity and reputation, competence and financial soundness; overseas financial experience may also be considered, with interviews where necessary. All directors should not be categorised indiscriminately under the same SMF or a fixed local headcount requirement.[7] [8]
Compliance and anti-money laundering arrangements should have clearly designated responsible personnel, sufficient resources and channels for escalating issues to the board. UK-incorporated legal persons must have their head office and registered office in the UK, and regulators need access to actual management, systems and records. Merely renting a correspondence address or appointing a nominal director is insufficient to demonstrate local substance.[3] [6]
Overseas branches must clearly define the responsibilities linking UK branch management and the overseas head office, and how UK risk, funding and booking arrangements are supervised. Building societies and credit unions must additionally comply with member governance and their respective laws; governance descriptions for ordinary shareholder-controlled companies must not be applied to them.[4] [11] [12]
Capital and financial resources
The basic capital resources of PRA are the currency-equivalent amount of the higher of €1,000,000 and £1,000,000, while individual capital and liquidity requirements must still be maintained. Members' deposit shares cannot simply be equated with all eligible regulatory capital. Issuing AT1 or Tier 2 also involves specific creditor-ranking requirements.[13]
Registered office and operational substance
A UK-incorporated bank must have its head office and registered office in the UK, and its actual business management and regulatory information must also be capable of effective supervision by PRA and FCA. There is no generally applicable London office floor-area or fixed employee-count threshold for this topic. Office, remote-working and outsourcing arrangements should be supported by evidence of actual control and regulatory accessibility.[3] [7]
International bank branches should explain their UK office and management arrangements, while disclosing the head office address, home regulator and information-sharing mechanisms. Building society rules must specify the principal office; a credit union changing its registered office must make the corresponding notification or registration with FCA, rather than merely updating its website contact page.[4] [11] [12]
Application document checklist
The formal application form and list of permissions sought must specify the customer scope, products and restrictions for deposit-taking, and be accompanied by the application fee. The current PRA fee for an ordinary bank application is £28,150, and Category 7 under FCA is also £28,150, usually totalling £56,300 payable to FCA. This is not registered capital, an annual fee or a consultancy fee.[6] [17] [18]
The regulatory business plan RBP should include the business model, market evidence and multi-year financial projections, and explain how the plan would be adjusted under stress scenarios. Responses to pre-application feedback and records of board approval and challenge should also be provided, rather than submitting only promotional product descriptions.[6] [7]
Domestic banks and subsidiary banks must provide final versions of ICAAP and ILAAP, covering risk identification, capital quality, capital requirements and liquidity plans. Overseas branches should provide whole-bank prudential information and UK branch business information under the international bank arrangements, rather than mechanically reproducing a domestic legal entity template.[6] [11]
As explained in PRA, proof of funds may comprise an auditor’s confirmation that capital has been paid in and is available, or a combination of bank statements showing the capital injection, the SH01 of Companies House, and board minutes approving the issuance of share capital. Capital instrument terms and applicable classification approval documents must also be provided to demonstrate that the instruments genuinely qualify as regulatory capital.[6] [13]
Controller materials should include an ownership chart, ultimate owners' identities, suitability explanations and source-of-funds documents. Group applications must also explain the purposes of connected entities, group support and supervisory boundaries. An existing licence held by an overseas head office does not remove the UK review requirement.[6] [11]
Management applications should include curricula vitae, fitness and propriety assessments, statements of responsibilities and responsibility allocation information. Compliance, anti-money laundering, risk management and internal audit arrangements should align with the actual organisational structure and explain how duties will continue during vacancies or departures.[7] [8]
Operational materials should include core systems, outsourcing contracts and evidence of implementation testing, together with business continuity and critical service recovery arrangements. Retail businesses should also attach product terms, charges, customer support and Consumer Duty implementation materials; supplier standard certifications alone cannot replace the bank’s own testing.[6] [7]
Deposit protection and exit materials should include customer disclosures, the Single Customer View, exclusions files and applicable recovery and resolution information. Those covered by the solvent exit regime for non-systemic institutions also need SEA; mutual institutions must additionally provide registered rules, membership criteria and legally constituted governance documents.[5] [6] [9] [12]
This is provided as a reference for organising the project; it cannot replace current official application forms or case-specific requests for additional materials. Please do not send identity documents or customer records through website forms.
Application process and key steps
First determine whether the UK business is a local legal entity, an international subsidiary bank, an overseas branch or a mutual institution, and confirm its activity perimeter and product permissions. Registering a company or mutual organisation merely establishes its legal identity and must be handled separately from authorisation to accept deposits.[1] [3] [4]
New banks may engage in pre-application discussions with the New Bank Start-up Unit, usually through initial, feedback and technical challenge meetings in sequence. Although optional, this stage is officially strongly recommended. Applicants should refine their own proposals and respond to regulatory feedback; completing the meetings does not constitute permission to submit or a promise of approval.[6]
Once acceptable RBP, capital, liquidity and governance materials have been prepared, submit the application forms and supporting documents under the PRA new bank procedure. The current detailed procedure specifies electronic submission to NewFirmAuthorisation@bankofengland.co.uk, with application fees handled under PRA and FCA requirements; not all initial bank applications can be described as merely completing forms on Connect.[6] [17]
PRA and FCA each assess completeness and their respective threshold conditions, and may request further information, review controllers and interview managers. PRA will notify the applicant in writing of individual capital and liquidity requirements before the authorisation decision. The applicant must provide evidence that capital is in place. PRA may approve only with the consent of FCA.[6] [8]
Applicants may choose to seek direct authorisation without mobilisation restrictions, or obtain authorisation with restrictions after meeting the threshold conditions and enter mobilisation. The approval notification and permission notice will specify permitted activities and restrictions. Bank details appear on the Financial Services Register from the date of authorisation; restricted status must not be marketed as full operational authorisation.[6]
Those using mobilisation should implement the agreed build-out plan, allow time for the exit review and request removal of restrictions through the applicable VoP process. Business may formally expand beyond the restricted deposit scale only after the regulators confirm that opening conditions, capital and other requirements have been met and approve the variation.[6]
Approval deadlines and project timelines
The statutory decision deadline for formal bank authorisation must be distinguished from the preparation period: six months from when an application is deemed complete, or twelve months from submission for an incomplete application. Completeness requires correctly completed forms, supporting documents of sufficient quality and detail, and responses to comments raised. The statutory period is a deadline for a decision to approve or refuse, not a guaranteed time to obtain authorisation.[6]
There is no official uniform commitment to complete pre-application preparation within three, six or twelve months; actual timing depends on proposal maturity, financing, the team, systems and supplementary information. Initial, feedback and technical challenge meetings at this stage are outside the decision period for a complete application. PRA generally provides formal feedback within ten working days after a meeting; this is a communication target, not a licensing deadline.[6]
Bank mobilisation normally lasts no more than twelve months and is a post-authorisation build-out period. It should not be added to the twelve-month statutory period for an incomplete application and marketed as a guaranteed two-year route to authorisation. PRA requires exit documentation to be submitted at least approximately three months before the expected end, allowing time for review. VoP remains subject to its statutory rules of six months for complete applications and twelve months for incomplete applications; the three-month preparation window is not a promise of approval.[6]
Changes to shareholders, directors and permissions
Acquiring or increasing control of a dual-regulated bank requires prior submission of a Section 178 notification to PRA and approval. Proceeding without notification and approval may constitute a criminal offence. Credit institutions are generally assessed against the 10%, 20%, 30% and 50% control bands. Indirect holdings, parent companies, acting in concert and significant influence must also be analysed; nominal shareholding percentages alone are insufficient.[10] [19]
Inserting a holding company may constitute a change-in-control event requiring prior approval even if the ultimate controller remains unchanged. A complete change-in-control notification generally has a sixty-working-day assessment period, excluding any lawful suspension for additional information. Reducing control or moving below a threshold may also require prior notification; a filing after signing cannot replace approval before completion.[10] [19] [20]
Changes to directors or senior managers should first be assessed for whether they involve SMF requiring approval, with responsibilities, fitness and governance records updated accordingly. Current PRA guidance states that the statutory assessment period for SMF is ninety days, but requests for further information or interviews may stop the clock. Changes to mutual societies’ rules, names or addresses must also be handled under the FCA registration regime; amendments to credit union rules do not take effect before registration.[4] [8]
Ongoing compliance and annual maintenance
In addition to ongoing supervision by PRA and FCA, member rights, the rules and statutory funding and lending ratios must be maintained. SI 2026/1115 was made on 2026-10-21, but the exclusions from funding calculations for specified BoE financing, certain MREL debt and liquidity repos, together with seal and execution reforms, only took effect on 2027-01-01 and did not abolish the 50% member-funding principle.[25]
Acquisition due diligence and transaction considerations
Before acquiring a bank, verify the legal entity, deposit-taking permission, customer scope and all restrictions on the Financial Services Register, and obtain actual regulatory correspondence and approval notices. If the target remains in mobilisation, establish the remaining time, outstanding matters, deposit cap and capital consumption. Buying shares does not automatically remove restrictions or reset the build-out period.[6] [10]
Bank-specific financial due diligence should reconstruct loan classifications, non-performing loans and impairment, collateral quality, large and related-party exposures, deposit concentration and liabilities repayable on demand. It should also examine whether capital instruments genuinely qualify, any side agreements or redemption arrangements, individual capital requirements, liquidity stress and the feasibility of recovery or exit. The value of authorisation cannot substitute for balance-sheet quality.[7] [13]
Retail deposit due diligence must check FSCS customer classification, aggregation across brands, SCV completeness, frozen accounts and underlying customer information for deposit aggregation platforms. An overseas branch has no separately acquirable UK legal entity shares. The structure of an overseas bank acquisition, business transfer or conversion into a subsidiary must be analysed, alongside home-state supervisory cooperation, fair treatment of UK creditors and booking arrangements.[5] [11]
Building societies and credit unions are mutual organisations owned by their members. Their membership interests cannot be freely bought and sold as controlling shareholdings in an ordinary bank, and mergers or conversions require checks against specific legal and regulatory requirements. FCA expressly provides that a credit union's transfer of engagements may only be made to another credit union. The transferring party normally needs to pass a special resolution through two members' meetings and submit the signed resolution to FCA within fourteen days of confirmation at the second meeting. Cancellation of registration following completion of the transfer of business and assets remains subject to a separate statutory certification procedure. The receiving party must ensure that its common bond accommodates the transferring members; otherwise, it must first amend and register its rules. This must not be promoted as a direct purchase of a general-purpose banking licence.[12] [29]
View the complete process for acquiring a licensed companyBusiness segments and applicable regimes
The following are specific permissions, organisational models or statutory categories covered by this topic. They do not necessarily each constitute a separate financial licence.
Frequently asked questions
Does PRA banking permission mean being regulated only by PRA?+
No. PRA is responsible for prudential matters such as banks’ safety and soundness, while FCA is responsible for conduct regulation. PRA authorisation also requires FCA consent. Banks must meet both regulators’ applicable thresholds and ongoing rules; PRA approval does not justify omitting fair treatment of customers or anti-money laundering arrangements.[1] [6]
Is having €500 × 10,000 ready enough to establish a UK bank?+
€500 × 10,000 is only the basic capital resources floor for an ordinary bank, not a guarantee of approval or a complete build-out budget. Risk-based capital, buffers, liquidity and financing of expected losses must also be satisfied. At direct launch or exit from mobilisation, the bank must demonstrate that it can maintain the relevant capital requirements for at least its first twelve months of operation.[7] [13]
Are digital banks, wholesale banks and small specialist banks all separate licences?+
Digital and wholesale generally describe business models or customer scope; formal permissions are determined by Part 4A and specific restrictions. Small specialist bank is a definition under capital rules, while SDDT is a prudential regime eligibility status. Neither may be described on a website as a general banking licence that can be purchased or applied for independently.[6] [13] [14]
Can a bank already accept deposits without restriction during mobilisation?+
No. The typical mobilisation restriction is £50,000 in aggregate across all deposits at the bank, and the approval notice must be followed. Mobilisation normally lasts no more than twelve months. Business may expand within the full scope of permission only after VoP has approved lifting the restriction.[6]
Does applying for a banking licence always take only six months?+
Six months is the statutory decision period after an application is deemed complete; the outcome may be approval or refusal. Incomplete applications have a separate statutory decision period of twelve months from submission. Pre-application preparation of the business plan, funding, personnel and systems has no uniform completion deadline and is not included in the complete-application period above.[6]
Are all bank deposits protected up to £120,000 per brand?+
No. FSCS is generally calculated per depositor, per PRA-authorised institution, not per account or brand. Customer and deposit eligibility requirements must also be met. Temporary high balances associated with specified life events have separate rules and a £1,400,000 limit; it must not be claimed that every large balance automatically receives that protection.[5]
Can an overseas bank open a UK branch directly on the strength of its home-state licence?+
An overseas licence does not itself replace UK deposit-taking authorisation; PRA and FCA must still separately accept the UK arrangements. PRA will examine home-state supervisory cooperation, resolution and treatment of UK depositors, and may require a UK subsidiary bank structure where retail operations are too large or effective supervision is lacking.[11]
Does registering a building society require at least fifty people?+
The current formation provisions in Schedule 2 to the 1986 Act require at least ten founders and submission of a memorandum and rules for registration as prescribed. Registration and permission to accept deposits are separate matters; capital, governance, lending and funding restrictions must still be satisfied separately.[12] [13]
Have the 2026 credit union reforms already removed capital and audit burdens?+
No. 2026-11DP2/26 is a discussion paper explicitly stating that no policy changes have yet been proposed or committed to, with feedback due by 2027-03-05. Existing capital bands, liquidity and internal audit requirements must still be followed. Common bond reform plans also require verification against actual legislation and commencement dates.[15] [21] [26] [27]
When buying a bank or changing directors, can you complete first and notify afterwards?+
Acquiring or increasing control of a bank normally requires prior approval under Section 178, including reaching a control threshold, acquiring indirect control or inserting a holding company. Before changing directors, identify whether this involves a SMF requiring approval, and update responsibility and fitness records. Completion conditions cannot substitute subsequent approval applications for prior approval.[8] [10] [19]
Official basis and verification sources
Primarily based on FCA, PRA / Bank of England, GOV.UK and current legislation. Older third-party guides supplied by users are used to organise business material and do not override the latest official requirements.
Tang Shangyong (Mr Tang / Drew) · Business Manager
Global financial licence application, transaction and ongoing compliance services