The Central Bank has fined Bank of Ireland Mortgage Bank €120,000 for breaches of the asset covered securities legislation.
From April to December 2011, BoI Mortgage Bank held credit transactions assets in excess of the 10% cap on the holding of such assets as set out the Asset Covered Securities Act 2001.
The Central Bank also said the company had inadequate internal controls to enable the firm to identify or ensure compliance with the limit on credit transaction assets.
It said that such breaches have the potential to undermine confidence in the asset covered securities market.
Its Director of Enforcement, Peter Oakes, said that any breach of the asset covered securities legislation can negate the positive effect of the legislation and is viewed as ''a serious matter''.
Its Director of Enforcement, Peter Oakes, said that any breach of the asset covered securities legislation can negate the positive effect of the legislation and is viewed as ''a serious matter''.
The breach by the firm of the 10% cap arose as a result of the downgrading of Bank of Ireland's long term credit rating in April 2011. This downgrade led to certain deposits held by the BoI Mortgage Bank in Bank of Ireland being reclassified as credit transaction assets.
The Central Bank stressed that no investors were affected by the breaches, while Bank of Ireland Mortgage Bank also too appropriate action to rectify the breaches once they were made aware of them. The bank has also introduced improved procedures and controls to prevent future similar incidences.
