€600k fine for bank breaches

SCOTIABANK Ireland has been fined €600,000 by the Central Bank for several breaches of banking regulations.

In 2008, the firm notified the Central Bank that calculations of quantitative liquidity ratios were wrong.

It also reported that discounted liquid assets were overstated by $300 million due to the inclusion of certain Investment Grade Securities in the calculation.

The calculation of cash flows did not include all interest inflows and outflows for interest rate swaps on the basis of contractual terms.

In April 2010, the firm had to notify the Central Bank that an automated programme error had been discovered in 12 of its Weekly Liquidity Returns between December 2009 and March 2010.

They related to the calculation of the cash flows involving two reverse repo transactions, resulting in an understatement of cash outflows of about $106m.

Yesterday, the Central Bank said when calculating the fine it took into account the fact that the breaches were not deliberate and that the failures were reported by Scotiabank.

The authorities also acknowledged the co-operation of the firm during the investigation and the steps taken to fully resolve the breaches that arose over the period.

Given the manner in which Scotiabank dealt with the issues, the Central Bank said “the matter is now closed”.

The regulatory body highlighted the importance of monitoring and testing their internal control systems on a regular basis.

They stressed the need to ensure changes to systems are properly and fully tested so regulatory requirements are strictly followed and the reports provided are accurate.