What must an institution demonstrate to become a licensed deposit taker in the UK?

To become a licensed deposit taker in the UK, an institution must demonstrate that it conducts its business prudently. This involves showing that the institution has robust risk management practices, adequate capital reserves, and effective governance frameworks in place. Prudential regulation is crucial to ensure the safety and soundness of financial institutions, thereby protecting depositors and maintaining the overall stability of the financial system.

By conducting business prudently, an institution assures regulatory bodies that it can manage potential risks associated with taking deposits, such as credit risk, liquidity risk, and operational risks. This assurance is vital not only for regulatory compliance but also for fostering public confidence in the institution and the financial system as a whole.