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The regulatory regime applicable to banks
The regulatory regime applicable to credit institutions and financial companies is set out in the General Framework for Credit Institutions and Financial Companies, enacted by Decree-Law No.298/92, of 31 December, as amended (RGICSF). In turn, payment institutions are subject to the Legal Framework of Payment Institutions and Payment Services, enacted by Decree-Law No. 91/2018, of 7 November, which implemented the PSD2 into Portuguese law.
As credit institutions must take the legal form of companies limited by shares and have their registered offices located within the Portuguese territory, they are also subject to the general principles and rules of company law further to the banking regulations.
Banks are a central part of the Portuguese financial system not only because of the sheer volume of their business but also because of their involvement in every segment of the Portuguese economy. They may provide a full range of banking services for corporate and private customers, including lending, taking deposits and other repayable funds from the public, granting credit on their own account to third parties in general, and collection and payment services within or outside Portugal (either through foreign branches or on a freedom to provide services basis). Foreign credit institutions may also pursue their banking activity in the territory under the right of establishment rules or on a freedom to provide services basis (this latter structure is reserved for credit institutions of other EU Member States only) provided that the relevant passporting requirements are duly fulfilled.
The BOP is the Portuguese central bank, being responsible for the prudential and market conduct supervision of credit institutions, financial companies and payment institutions, to ensure the stability, efficiency and soundness of the financial system, as well as compliance with the rules of conduct and transparency requirements towards bank customers, thereby ensuring the safety of deposits and depositors, and the protection of consumer interests.
In addition to the RGICSF, credit institutions, financial companies and payment institutions are also required to comply with the notices, instructions and circular letters issued by the BOP.
By the same token, whenever credit institutions or financial companies also pursue financial intermediation activities, they will be subject to the supervision of, and regulations issued by, the Portuguese Securities Market Commission (CMVM). The same applies to the insurance intermediation activities that may be pursued by banks, which are also subject to the supervisory powers of the Portuguese Insurance and Pension Funds Supervisory Authority, and are required to comply with the regulations or circular letters issued by the latter.
In view of the foregoing, credit institutions may ultimately be subject to the supervisory powers of the three above-mentioned Portuguese regulatory authorities, in addition to the European Central Bank (ECB), as a result of the introduction of the Single Supervisory Mechanism (SSM) in 2014.
