Investment banking is a specific division of banking related to the creation of capital for other companies, governments and other entities.
Investment banks specialize in large and complex financial transactions such as underwriting, acting as an intermediary between a securities issuer and the investing public, facilitating mergers and other corporate reorganizations, and acting as a broker and/or financial adviser for institutional clients.
An applicant shall make a formal application to be issued with an Investment Banking and Corporate Advisory Licence. Upon issuance of the license, the bank will be licensed to conduct activities as an;
- investment dealer; and
- investment adviser in corporate finance, credit finance, asset management and non-custodian.
This application form shall be lodged together with a processing fee of Rs 100,000. It is also important to note that upon issuance of the licence, there shall be an annual fee Rs Rs 300,000.
The Applicant will be required to inject a minimum capital of Rs 50 Million. The applicant shall also ensure to disclose to the Central Bank all other licenses held under its name and the issuing authority.
Banks ought to have a professional indemnity insurance cover and the applicant should indicate the subscription it intends to subscribe to, together with a quote from a reputable insurance company.
It would be remiss for us to fail to mention that banks issued with an ‘Investment Banking and Corporate Advisory License’ will be provided with a 5-year tax holiday.
Lastly, although this is still in the infancy stages, there is a proposal to amend the Banking Act in particular the definition of “Bank” which will exclude investment banks. Consequently investment banking business will be regulated by the Financial Services Commission.