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Home > Prudential Regulation Authority > New Bank Start-up Unit > New Bank Start-up Unit - Mobilisation
 

New Bank Start-up Unit - Mobilisation

How can you build out your new bank with confidence? - Mobilisation
 
As part of ‘A review of requirements for firms entering into or expanding into the banking sector' available here, we introduced an alternative route to becoming a fully operational bank. This involves the new bank being authorised at an earlier stage to help it secure further investment, recruit staff, invest in IT systems and commit to third-party suppliers etc with the certainty of being authorised. In return, we limit the amount of business the new bank can undertake until it is fully operational. We refer to this as the mobilisation route. Mobilisation is also sometimes referred to Authorisation with Restriction or AWR.
 

In this section you can find out more about mobilisation including:

 

 Is mobilisation right for all new banks?

Mobilisation is generally suitable for start-up banks which may not have the upfront investment, or that need time to build IT systems, infrastructure, recruit staff or engage with third-party suppliers.

Mobilisation is not usually suitable for existing banks that have the resources, capital and infrastructure to allow them to set the bank up at speed before being authorised. This could include establishing a UK branch or a UK subsidiary of a well-established international firm. In these cases we expect the firm will utilise existing IT systems and other infrastructure and can call on their parent for financial resources. However, we will consider the use of the mobilisation route on a case-by-case basis.

 What are the benefits of using the mobilisation route?

Banks that have taken the mobilisation route have told us that the certainty of being authorised allows them to proceed with far greater confidence and to invest in the build-out of the bank. You will need to complete all of your mobilisation activities and be fully operational before you start to trade fully and this can be done with the confidence of being authorised. Another benefit is that you will need to provide less information when you submit your application (see ‘How is mobilisation different from being fully operational at authorisation?’ below). 

 What do you need to have in place to be authorised and use the mobilisation route?

We expect the following, as a minimum, to be in place to be able to authorise a bank that intends to use the mobilisation route:
  • business plan – a fully developed business plan including financial resources plan and financial projections for the first five years demonstrating that your business model is viable and sustainable;
  • financial resources - a fully developed Internal Capital Adequacy Assessment Process (ICAAP) and the Internal Liquidity Adequacy Assessment Process (ILAAP) and the minimum capital requirement in place;
  • corporate governance – high level corporate governance/structure with the key 'guiding minds' in place. As a minimum this would include the Chairman, CEO and a second senior executive. Please note we expect other key roles to be filled shortly after a bank enters mobilisation, for example the MLRO but this will be considered on a case-by-case basis;
  • customer journey – near final customer journey including details of products, pricing, and on-boarding arrangements;
  • risk management – draft risk management and control structures;
  • IT - high-level outline of IT infrastructure and systems and material outsourcing arrangements;
  • policies and procedures – under development;
  • recovery and resolution – draft Recovery Plan;
  • business continuity – draft Business Continuity Plan; and
  • project plan – a credible and realistic mobilisation plan, that your board has endorsed, which includes all of the activities required to complete the build-out of your bank.

Depending on the nature of your bank and business model, it may be necessary for you develop some elements further before authorisation. Conversely, you may be able to defer certain elements until during mobilisation. We will make you aware of this during the pre-application stage when we discuss your mobilisation plan with you.

 How and why do we restrict the amount of business the new bank can undertake?

We will place a requirement on the new bank to limit the amount of business it can undertake until the build-out is complete and the bank is ready to be fully operational. For example, the requirement may allow the bank to accept deposits, but will limit the amount to reflect the lack of infrastructure and controls in place at the start of mobilisation.

Typically we will cap the level of deposits that a new bank can accept to £50,000. Once fully operational, we will remove the requirement and the bank can start to trade fully.

We anticipate firms will want to progress quickly through the mobilisation phase. This could take as little as three months but cannot continue indefinitely and should take no longer than 12 months.

 How is mobilisation different from being fully operational at authorisation?

The key difference is that the new bank is authorised at an earlier stage and will appear on the Financial Services Register as an authorised firm. This does not mean we are only considering authorising the bank or that the authorisation is subject to some conditions being met. You will be an authorised bank, just with a limit on the business you can undertake.

The table below provides a comparison between the information requirement for a bank that wants to be fully operational at authorisation and one that mobilises.

 Mobilisation and Threshold Conditions

As noted above, as an authorised firm you will need to meet and continue to meet each regulator’s Threshold Conditions. This is true regardless of whether you take the mobilisation route or are fully operational at authorisation.
 
The difference during mobilisation is that with the restriction in place on the amount of business that a new bank can undertake, the requirements for meeting our Threshold Conditions are proportionately lower. However, prior to exiting mobilisation, you must be able to demonstrate to us that you will meet our Threshold Conditions without the limit on the amount of business the bank can undertake as is the case with a new bank that is fully operational at authorisation.
 
The table below provides a comparison between the information requirement for a bank that wants to be fully operational at authorisation and one that mobilises.

 

​Assessment area ​Fully operational at authorisation ​Mobilis​ation route
​Business plan/viability ​Fully developed ​Fully developed
Financial resources
Sources of funding
ICAAP & ILAAP​
​Fully developed ​Fully developed
Corporate governance
Structure
Board
Senior management​
​Fully developed
Substantially in place
All key senior management identified
​High-level structure
Key ‘guiding minds’ in place with senior roles critical to mobilisation identified and ready to be recruited
Customer journey including details of products, pricing, and on-boarding arrangements​ ​Fully developed ​Near final
Recovery Plan​ ​Fully developed ​Draft
Business Continuity Plan​ ​Fully developed ​Draft
Risk management and control structures​ ​Fully developed ​High-level outline
IT infrastructure and systems​ ​Fully developed ​High-level outline
Material outsourcing arrangements​ ​Fully developed ​High-level outline
​Policies and procedures ​Fully developed ​Not required but development should be planned
​Mobilisation plan ​n/a ​Fully developed and signed off by the board
 

It is important to stress the authorisation threshold for banks that mobilise is not lower: all of the information above will be required regardless of which route you take. However, when taking the mobilisation route you should be ready to submit an application more quickly than by the traditional route. 

 What happens during mobilisation?

​During mobilisation you will be focused on completing the build-out of the bank. This could include (but is not necessarily limited to) the following:

  • fully capitalising the bank;
  • finalising senior management appointments and staff recruitment and training;
  • finalising your customer journey, including details of products, pricing, and on-boarding arrangements;
  • building-out control functions such as Risk, Internal Audit and Compliance;
  • build, test and implementation of systems and IT infrastructure;
  • completing policies and procedures;
  • finalising outsourcing arrangements;
  • finalising your Recovery Plan; and
  • finalising your Business Continuity Plan.
These activities will depend on the nature of your firm and its business model. The list of mobilisation activities applicable to you will be discussed with you prior to entering mobilisation and will also be clearly articulated in your welcome pack and letter.
 
Mobilisation activities do not have to be done in strict sequence and you can decide when to complete them. You may decide to start working on some activities prior to entering mobilisation as this may allow more time to complete them. However, you should be aware of the risks involved in commencing any of the activities without the certainty of being authorised.
 

What do we expect during mobilisation?

During mobilisation you should remember the bank will be an authorised firm and you must meet the standards set out in both the FCA Handbook and the PRA Rulebook. You may also have to provide us with relevant information to show you are meeting these standards. More detail on your statutory reporting obligations can be found here.

In particular, mobilisation can be very capital intensive and you should be mindful of not breaching your minimum capital requirements at any point. Capital for new applicants under mobilisation is often set at the minimum capital requirement as required by the European Capital Requirements Directive, plus an add-on for wind-down costs. These funds must not to be used to meet the costs of mobilisation.

You will also be expected to submit regular progress reports (including details of any issues or slippages) against your mobilisation plan to us and provide evidence of your progress towards becoming fully operational. For example, copies of policies and procedures and your final Recovery Plan.

We will provide you with regular feedback through face-to-face meetings, telephone calls or by email.

As a regulated firm you may also need to obtain our approval if:
  • a new investor acquires an interest in your bank;
  • an existing investor increases their stake;
  • an existing controller decreases their stake or ceases to have an interest in the bank;
  • you change your business model; or
  • you need to apply for waivers or modifications to alter your compliance obligations.
 
If you are unsure whether you will need our approval you should contact your case officers who will be able to help.
 

 How do you exit mobilisation? 

We anticipate that firms will want to progress quickly through the mobilisation phase. This could take as little as three months but cannot continue indefinitely and should take no longer than 12 months.

Your case officer will help you when the time comes as you will need to remove the requirement restricting the business you can undertake by submitting a Variation of Permission (VoP) application via Connect. However, this VoP will not be approved until you have completed all of your mobilisation activities and are ready to start trading fully. As part of this process, we may ask for confirmation from your board that you have successfully completed mobilisation.

Once we have approved your VoP, you will be sent written confirmation that the requirement has been removed and you can start to trade fully. You can find more information on the VoP process here. Any changes will be reflected for your bank on the Financial Services Register from the date on which the VoP takes effect.

 What if there are problems during mobilisation?

In our experience banks often underestimate the amount of time required to build-out the bank during mobilisation. In particular, the amount of time it takes to build, test and implement IT systems can be greater than expected. We always encourage firms to ensure their timetable includes appropriate levels of contingency while bearing in mind our expectation that mobilisation should not take longer than 12 months.

If you have concerns you will not be able to meet the terms of your mobilisation plan you should discuss these with your case officers as soon as possible. Similarly, if we have concerns about your progress, we will discuss these with you and may ask you to prepare a revised mobilisation plan.

However, if you are unable to complete mobilisation within 12 months, or to the required standard, we may take steps to remove your authorisation or you may decide to apply to cancel your authorisation.

Any changes will be reflected on the Financial Services Register at the appropriate time.

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