Two new classes of banking licence were launched by the island’s Financial Services Authority in August 2016.
Speaking to International Adviser, Capital’s chief executive, Greg Ellison, explained: “The 1(2) licence we are working towards achieving allows non-banking entities to apply for a banking licence to serve corporate clients and high net worth individuals with liquid assets over £500,000 ($658,387, €559,742).”
He said: “It is a full banking licence, with all of the requirements around regulation, capital adequacy and liquidity, but is targeted primarily towards businesses. Retail clients are precluded under the licence, so there is no depositor compensation scheme.”
When it is granted a licence, Capital will add banking to its existing trading platform and investment business offerings. Capital’s primary focus in attaining the 1(2) licence will be on providing core banking services to fiduciaries, e-commerce and e-gaming firms, but also to family offices.
At least four other companies are understood to be in the race to get the 1(2).
The second new class of banking licence is the 1(3), which is similar to the representative office licences offered to foreign banks in Australia and Canada.
Pragmatic local decision-making
Ellison believes that, through the ABR, the IoM Government is providing an opportunity for start-ups and niche enterprises to obtain a banking licence and compete in a market that has major room for growth.
Having now sat on both sides of the table following 15 years in big banks, most recently as managing director at Barclays Wealth, Ellison is familiar with the challenges that large organisations face in providing banking services and deciding which clients to serve and which accounts to take.
Capital International Group is focused on providing core banking, savings, foreign exchange and lending to businesses, and hopes to provide “pragmatic local decision-making and accounts being opened within seven days”.
“We don’t have the scale of the big banks, but we can use that to be fleet of foot… We will have better technology and we will better manage data so we can take advantage where they are hindered by legacy technology.”
At the time of speaking to International Adviser, Ellison said that the company was about 70% of the way through the application process and hoping to get a provisional licence in 1Q18.
“We’re hoping to get the doors open in the summer of 2018, but that is dependent on how quickly we progress with the island’s FSA.”