The Central Bank is investigating an alleged breach of compliance obligations at Hibernian Investment Managers, the fifth-largest investment house in the Republic. The company also announced yesterday the surprise resignation of its high-profile managing director and chief investment officer Mr Pramit Ghose.

An internal disciplinary process is underway, sources close to the company confirmed, but is understood not to involve Mr Ghose. The company would not comment on the reasons for Mr Ghose's resignation and the executive was unavailable for comment by telephone or at his home yesterday evening.

Hibernian Investment Managers said yesterday that the breach was identified by its own internal control procedures. The problem is understood to be connected to the Templar Fund, the only in-house managed hedge fund in the Republic. The company informed the Central Bank about the issue and has embarked on its own detailed investigation. It is standard procedure for the Central Bank to carry out an investigation of any reported breach and the Bank would not comment on this case or on the nature of the irregularity at Hibernian.

A company statement said that the alleged breach of compliance was related to one transaction and had been corrected. "No client of Hibernian Investment Managers has or will be at a loss," the statement said. Mr McGorrian, chief executive of the Hibernian Group, said he regretted Mr Ghose's resignation and thanked him for his services. Hibernian Investment Managers is the only domestic institutional fund manager offering a proprietary hedge fund. The high-risk Templar Fund was launched in April of this year and has a very high minimum investment, believed to be around £50,000.

The managers of hedge funds enjoy more flexibility to take risks than traditional fund managers and they usually take a stake in the fund. They employ a range of instruments to manage risk and are expected to make above-average returns.