We recently collaborated with groups that are looking to buy a bank. What are my thoughts about the pros and cons of applying for a license versus buying a regulated company?
Clearly the main disadvantage of buying a regulated entity is that it will inherit with some liabilities and obligations towards third parties. For example, employees that don’t want to leave, and board members that have complex reputations, clients’ accounts with poor KYC.
Usually existing banks and asset managers have also existing vendors with depreciated solutions and migration can become a nightmare.
Sisyphe, par Franz von Stuck, 1920.
The advantage of buying a licensed company is that you will perhaps save time. You might also be interested to develop existing business with new principles and services like bitcoin.
This obviously is interesting if they have a properly manage CRM or client relationship management tool. You need to read the CRM and PMS audit trail first.
Now, if you go to the acquisition scenario, and you wish to buy a company you might have to build a new team and with the swiss regulation… highly skilled and expensive local professionals. You will need also to apply for an official approval for the change of control, this means that the new owners should be approved by the regulator too! The new board of directors should be structured with high reputation members.
The regulator may also ask you what the new business model are and how this new business model will improve the current situation.
When you start this new bank it is also very likely that the focus will be important on the bank inflows. Each time a stakeholder, or a board member would do any type of inflow or outflow a strong surveillance should be enforced.
The complexity of this process is actually working fine but regularly need updates. We could not advise you better than using InvestGlass remediation tools for a complex on boarding and continuous monitoring. The idea is to be able to show to auditors at any time, yes at any time, that the due diligence and AML, LBA, sanctions check, proof of funds… was done correctly.
Is it better to buy or to build?
If it is to add another shareholder and not change the business operations into an existing structure well definitely it is better to buy.
Now if you have to change everyone in the board, in the operations, clunky pms software to then it’s perhaps better to start something from scratch and applying for your own license.This could be the right time to implement tool for SRI ESG gamified and better onboarding – for the next generation.
And you would you buy or build ?