Central Bank fines LGT Capital Partners €95,000

Financial service provider failed to maintain the required level of regulatory capital

The Central Bank has fined financial service provider LGT Capital Partners (Ireland) €95,000 for failing to ensure it had in place and used sound administrative and accounting procedures.

LGT Capital Partners did not have internal control mechanisms to enable it to monitor and recognise the risk that its increasing debtor balance could cause its level of own funds to fall below the required amount, according to the Central Bank.

Furthermore, it failed to maintain the required level of regulatory capital to ensure it can absorb unexpected losses. In January 2013, on receipt of a periodic regulatory return from the LGT, the Central Bank noted the firm had a deficit of €132,000 in its regulatory capital.

The Central Bank requested information from the firm which showed that it was undercapitalised for a total of 50 days between 31 December 2012 and 24 February 2013. The amount of the shortfall varied from 3,000 to €521,000.

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Central Bank director of enforcement Derville Rowland said this is the first settlement with an investment firm for a breach of the capital requirements set out in the European Capital Adequacy Regulations.

“The purpose of the Capital Adequacy Regulations is to ensure that investment firms have enough capital to absorb losses that may arise due to market conditions or other events. The Central Bank monitors the capital requirements of investment firms through returns which are submitted to the Central Bank on a periodic basis.”