From June 2011 to December 2012, QIB (a UK subsidiary of an overseas firm) failed to recognise that it had to comply with regulatory requirements relating to the assessment and maintenance of financial resources and capital. As a result, the firm did not undertake a regular assessment of its capital as it was required to by rules in force at the time.
QIB further failed properly to monitor and report to the regulator its total exposure to connected parties and in December 2011 was significantly exposed to a group of connected clients. As a result its Large Exposures in the period that followed amounted to more than 25% of its capital assets, in breach of regulatory requirements.
QIB’s failure to identify and report its Large Exposures left the firm temporarily significantly under-capitalised and open to higher levels of risk than it had appreciated
The firm was in breach of these requirements for over a year.
In a statement the PRA said that since December 2012, QIB has undergone significant restructuring and an entirely new Board is now in place. The firm has also, since December 2012, committed resource to matters of governance, capital monitoring and reporting systems and controls to mitigate the risk of similar breaches occurring again.
Andrew Bailey, Deputy Governor for Prudential Regulation and CEO of the PRA, said:
“In failing to assess, maintain and report on its financial resources for over a year, QIB failed to meet some of the most basic regulatory standards. It is essential that regulated firms are aware of, and have the systems in place to ensure adherence to, regulatory requirements. QIB’s failures in this regard were serious, which is why we considered it appropriate in this case to impose a fine.”
