The rendering of credit or financial services by credit institutions or financial services companies other than banks is limited in Portugal, as regards the type of services which may be rendered by each entity.
Although the scope of financial leasing companies has been broadened to include operational leasing activities, the scope for other types of credit institutions or financial services companies to provide services remains narrow. This situation has made Portugal a less attractive location for a branch or subsidiary of a European financial services provider that intends to provide more than one financial service through a sole entity. To overcome this problem, the Portuguese authorities are preparing a diploma that will create a new legal entity, similar to the estabelecimientos financieros de credito (credit financial establishments) existent in Spain since 1996 (created by Real Decreto 692/1996 of 26 April). This new entity will allow credit institutions (or financial services companies depending on the type chosen) a broader scope of activity. It is expected that the new entity will be subject to the same legal regime as credit institutions, but with two important changes regarding its scope of activity and self-financing.
As in Spain, it is expected that these entities will not be allowed to receive reimbursable funds from the public in the form of deposits, loans, temporary transfer of financial assets and other similar forms. However, and according to the preamble of the Spanish Real Decreto, this limitation makes them exempt from the obligation to join a guarantee fund of deposits. It also justifies a less demanding standard of requirements for the exercise of their activities in comparison with other credit institutions, such as banks, while simultaneously stimulating the search of alternative ways of self-financing.
The new entities are expected to be allowed to perform several financial activities now restricted to banks, as regards joint performance, such as factoring, financial leasing, issuing or managing credit cards, granting guarantees or granting loans.
Existing credit institutions are limited in the ways they can finance themselves. As such, in the case of the new entities, it is also expected that the law will foresee alternative ways of financing as it does in Spain.
In relation to incorporation requirements, these are also expected to be less demanding than those required to incorporate a bank. For example, minimum share capital requirements or the numbers of members necessary to integrate a board of directors are expected to be lower than those required for banks.
The finalization and publication of the diploma will make Portugal a more attractive location for investment in the area of credit and financial services.
Sofia Gouveia Pereira and Margarida Lino Santos
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