Contrary to what is the case in many jurisdictions, in Norway the business activity of lending is subject to strict licensing requirements. Only certain financial institutions are eligible for a license permitting them to conduct the business of lending in Norway.

Licensed EU/EEA credit institutions, meaning banks and other similar lending institutions which fund them self from the public, may, upon completing certain notification procedures, provide lending services cross-border into Norway (e.g. without having a physical presence in Norway).

Other foreign financial institutions, being either financial institutions domiciled outside of the EU/EEA area or financial institutions domiciled within the EU/EEA area which do not meet the requirements of being a EU/EEA credit institution (a typical example would be an investment fund), may as a rule not provide lending services into Norway on a cross-border basis. To determine whether such institution will be permitted to provide lending services to a Norwegian borrower, the question is often whether it has «provided» or «offered» its services into Norway, and as such, trigger the Norwegian license requirements.

When assessing this issue, the Norwegian Financial Supervisory Authority (Finanstilsynet), the governmental body charged with granting licenses to conduct banking activities, operates on the non-statutory law principle of «first approach«. The essence of this principle is which party was the first to approach the other as pertains to the lending service.

As a general rule, if a Norwegian borrower, or a representative of such a borrower, makes the «first approach«, the foreign financial institution will not be deemed to have offered its services cross-border into Norway. The Norwegian license requirements will not apply to lending directly based on such approach.

However, if the foreign financial institution, or its representative, made the «first approach«, the Norwegian license requirements will be triggered. Most likely this will also be the case where the contact is initiated by the borrower on the basis of marketing targeting the Norwegian market by or on behalf of the foreign financial institution.

Note that there are certain exceptions to the license requirements, including that they will not necessarily apply to isolated cases of financing.

Please contact us should you have any questions regarding the Norwegian licensing requirements or any financial regulatory matters.

Here you will find more information about our Financial Services Regulatory Group.