Conditions for Licensing Banks and Financial Institutions in Algeria

The Bank of Algeria has carefully specified the conditions for licensing the establishment of a bank or financial institution in Algeria and the methods for opening branches thereof.

The bank also stressed, in a new system signed by its governor Salah Eddine Taleb, in continuation of the monetary and banking law issued in 2023, the minimum capital to open these banks, which is equivalent to DZD 20 billion for business banks and DZD 10 billion for digital banks.

In issue No. 18 of the Official Gazette, a new regulation for the Bank of Algeria specifies the conditions for licensing the establishment of a bank or financial institution, and opening and approving a branch of a foreign bank or financial institution.

According to this regulation No. 24-01 dated February 6, 2024, the license application should be directed to establish a bank or financial institution or open a branch of a foreign bank or financial institution, by a natural or legal person, to the Chairman of the Monetary and Banking Council, attached to the project file that is planned to be implemented.

The Council decides on the possibility of granting a license to establish or open a bank, based on an assessment of the feasibility of the project, especially by relying on the description document that includes the type of institution being established and the main motives for choosing the investment to allow for an evaluation, the possibility of its embodiment and its comprehensive returns and its impact on the economy as well.

The Council also takes into account the characteristics of the founders who provide the funds and the status of the main shareholders in their country of origin, their financial capabilities, their experience and knowledge in the banking and financial field when necessary, as well as the character, integrity and capabilities of the founders and fund providers, the nature of the contributions and capital contributions, the extent of their consistency with the chosen activity model and the source of the funds provided.

Furthermore, according to the same source, the Council looks into the consistency of the applicant’s draft basic law and the legal form of the project, with the applicable legislation and regulation, in addition to the technical and economic study, financial and strategic information planned for the medium and long term, and the activity program over five years.

The applicant for a license according to the new conditions must also submit a descriptive document showing the expectations of compliance with the provisions of the legislative and regulatory apparatus that governs the information and disclosure system, the internal control apparatus and the interpretation of risks associated with the activity, the accounting system, the precautionary system, the system for preventing and combating money laundering and financing of terrorism, and a list of the main managers, the policy of confidentiality and protection of data, funds and values.

Under this new legal text, the Monetary and Banking Council decides on the license according to a decision notified to the applicant, by the Secretary-General of the Council, with the possibility of attaching the granted license to special conditions, obligations or recommendations. After obtaining the license to establish or open from the Monetary and Banking Council, approval must be sent to the Governor of the Bank of Algeria, within a maximum time of 12 months.

In addition to the file for accreditation, the application must also include a file to accredit the managers and qualify the responsible executives, who are appointed to determine the direction of the activity, monitor it, and manage the entity that will be created following the provisions of this system.

This legal text confirms that after the relevant departments of the Bank of Algeria carry out a field inspection to ensure that the necessary human and material means are provided for the concerned party to carry out its activities, they prepare a report that is sent to the governor, who grants accreditation to the applicant if all conditions are met.

Regulation No. 24-02 of February 6, 2024, was issued in the same issue of the Official Gazette, relating to the minimum capital of banks and financial institutions operating in Algeria.