One-off public bond issues are not deposit-taking; ongoing ones may need licence

Estonian lenders that fund their loan books by selling bonds to the public have a clearer boundary for when they need a banking licence. Raising money from the public through bonds as capital-market instruments is not the taking of deposits or other repayable funds where the issuance is not continuous or systematic.FI Admitting such instruments to trading on a trading venue is likewise not deposit-taking. But where an undertaking continuously or systematically raises capital from the public through capital instruments while lending on its own account and in its own name, that activity may qualify as the business of a credit institutionFI, which only a licensed credit institution may pursueFI.

Under § 4(1) of the Krediidiasutuste seadus only credit institutions may take money from the public for deposit or otherwise raise other repayable fundsRiigiteataja, reflecting Article 9(1) of Directive 2013/36/EU. A credit institution is an undertaking whose business is to take deposits or other repayable funds from the public and to grant credits on its own account under Article 4(1)(1) of Regulation (EU) No 575/2013, and recital 14 of the directive covers undertakings that raise repayable funds from the public through the continuous issuance of bonds or comparable securities. The European Banking Authority expects such activity to be regular and systematic rather than single or ad hoc transactions, an approach the European Central Bank follows.

The memorandum of 11 November 2026FI revises the earlier domestic position, which treated fundraising through any issuance of debt directed at public circulation as characteristic of credit-institution activityFI. A single public bond issue structured as one bounded transaction is now accepted as falling outside that activityFI, and a lending business may repeatedly, but not continuously, raise capital from the public through bonds without a credit-institution licenceFI. The statutes give no sharper test for when issuance counts as continuous or systematic.

That assessment turns on the facts. Relevant considerations include the time elapsed between separate public bond issues and the extent to which the lending business or its growth depends on an ongoing flow of bond issuance. Continuous public issuance, whether in a single issue or in series under one issue or programme, combined with lending, can amount to credit-institution activityFI, while admission to trading alone changes nothing.

A bond that counts as a capital-market instrument distinct from a deposit shows features such as a maturity longer than one year, no right for the investor to demand early redemption, an issuer early-redemption right that does not make the instrument short-term or immediately repayable, and a minimum denomination of 1,000 euro or more. Depositing entrusts money to a bank expecting the same sum to stay immediately available, while bond investment accepts investment risk vis-a-vis the issuer; the expectations and the regulatory protection differ accordingly.

Lenders raising capital this way must still meet securities-law requirements, including publishing a prospectus where required. Where the fundraiser lends, so that its business resembles a credit institution's, investor disclosures must state very clearly that the instrument is not a deposit, explain that the fundraiser holds no credit-institution licence and is not subject to prudential requirements for the credit, liquidity and other risks of lending, and warn that the deposit guarantee scheme does not cover the bonds. The memorandum creates no new norms; each case is assessed on its circumstances and actual economic substance, and anyone in doubt should take expert advice.

Legal basis: Krediidiasutuste seadus § 4(1); Directive 2013/36/EU Article 9(1) and recital 14; Regulation (EU) No 575/2013 Article 4(1)(1); Finantsinspektsioon memorandum no. 4.11-3.1/7879 of 11 November 2026 on Krediidiasutuse tegevusala.