The legislation and associated guidance, which is designed to attract new banking operators to the island, will come into effect on 1 August 2016.
The new banking licences are aimed at non-retail deposit takers, such as high net worth individuals, new business start-ups or representative offices of foreign banks which do not plan to take deposits on the island.
“Our existing banks provide an excellent service, but the number of operators has fallen since 2008 and this initiative aims to increase the choice for businesses in the Isle of Man and internationally,” said Laurence Skelly, minister for the Department of Economic Development.
Two new licences
The new banking regime is effectively an expansion of the IoM’s existing class 1 (deposit taking) banking licence through the addition of two new classes of licence.
The first, known Class 1 (2) licence, would only be available to corporations, trusts or an individual depositor who can certify they have a minimum £500,000 in net worth. Standard bank licence requirement for competency, solvency, integrity and the need for a real presence on the Isle Of Man would still apply.
The second new licence, known as Class 1 (3), is similar to the representative office licences offered in Australia and Canada for foreign banks, and will carry an application of £3,500 ($4,580, €4180) and an annual licence fee of £2,500.
Neither of the two new licences are involved in the Isle of Man’s depositor’s compensation scheme, and licence holders do not have to make contributions to the fund nor can they draw any benefits from its protection.
The government said it was keen to use the new licences to attract non-retail niche banking operations as well as representative offices of foreign banks.
“We are already in talks with several such banks which have expressed interest in the ABR,” said Leonard Singer, department member for Financial Services and Registries.