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Article (2): Approval of Major Acquisitions

C 2/2020 Effective from 24/4/2020
  1. A Bank shall not acquire any other institution, regardless of its type of activity, nor transfer any part of its liabilities to another person, without obtaining the Central Bank’s prior approval.
     
  2. A Bank must obtain written approval from the Central Bank prior to completing a Major Acquisition. An application for Central Bank approval must provide at a minimum:
     
    1. A detailed description and analysis of the proposed Major Acquisition including the consideration and value received, funding, and projected impact on the financial position, income statement, and prudential requirements;
       
    2. Projected impact on the Bank, and if applicable group business model, pro-forma statements of the combined entity, the potential impact on market share and competitive dynamics, customer access, product and services, risk profile, governance (including reporting lines), risk management, internal controls, internal audit, information systems and human resources;
       
    3. Due diligence report and other relevant documents, including those provided to the Board as part of the Bank’s internal approval process, Banks should consider obtaining Central Bank no objection before entering the due diligence process;
       
    4. The valuation methodology used to price the Major Acquisition;
       
    5. An explanation of how the Major Acquisition transaction meets the criteria set out in Article 5 of this Regulation; and
       
    6. Any other information necessary to enable the Central Bank to reach an informed decision on the merits of the application.
       
  3. Banks must ensure that at all times they do not hold shares (and convertible debt) in commercial companies beyond a limit of 10% of their Total Regulatory Capital.
     
  4. This Regulation does not apply to the purchase of a Subsidiary or Affiliate. Banks are required to seek Central Bank approval separately for any purchases of a commercial entity’s shares which would result in that commercial entity becoming a Subsidiary or Affiliate of the Bank. Where a Bank is fully acquiring or merging with another entity, the Central Bank may approve the transaction beyond the 10% limit.