KBC Bank Ireland fined 1.4 mln euros by central bank

The Central Bank of Ireland on Monday fined KBC Bank Ireland Plc 1.4 million euros (1.56 million U.S. dollars) and reprimanded it for breaches of certain financial regulations from September 2012 to February 2016.

In a statement, the central bank said KBC Bank Ireland breached the 2010 and 2013 codes of practice on lending to related parties.

The breaches have been admitted by KBC Bank Ireland, the central bank said, adding this was the first enforcement action brought by the central bank against a credit institution for breaches of the code.

The central bank introduced the code to guard against abuses in lending to related parties and as part of the central bank's regulatory approach following the financial crisis.

Under the code, relevant firms must obtain the prior approval of their board, or a subcommittee thereof, before they can enter into or vary loan transactions with related or connected parties, which include directors, senior managers, significant shareholders of the firm and spouses or domestic partners.

In the four-year period under review, KBC Bank Ireland breached the code on eighteen separate occasions, according to the central bank.

"Such repeated breaches of the code, in spite of ongoing central bank intervention and engagement with the firm, is unacceptable and demonstrates a failure on the part of the firm to have in place and adhere to the necessary policies and processes to ensure effective compliance with the code; this is reflected in the level of the fine and the reprimand issued today and accepted by the firm," said Derville Rowland, the central bank's director of enforcement.

She said the central bank required all firms to ensure full compliance with the code, adding that where firms fell short of the required standards, the central bank would continue to take the necessary enforcement action. Endit