Regulator has no role on 'conduit' activity

The Central Bank has said it has no role in the regulation or authorisation of highly leveraged "conduit funds".

It a statement yesterday it said that its regulatory arm, the Irish Financial Services Regulatory Authority, was not responsible for regulating Ormond Quay or the two other conduit funds managed in Dublin by Sachsen LB Europe.

"In relation to Ormond Quay, this so-called 'conduit' activity is not regulated by the regulator," it said. It added that the regulator's involvement had been limited to ensuring that the prospectus for one of the funds indicated that it was not regulated by the authority.

The bank refused to comment on how and when it became aware of the problems at Ormond which surfaced over the weekend.

It also refused to say whether it was aware of the extent of this type of unregulated activity taking place out of Dublin or if it was concerned about the health of similar Dublin-based funds.

It would not comment on whether it had contacted any of these funds to establish their potential liabilities.

"As part of our regulatory role, the financial regulator is closely monitoring developments in the market at present. We are maintaining ongoing dialogue with regulated firms, and with other regulators," it said.

The bank also refused to comment on whether it had become aware of the problems through its role as the regulator of Sachsen LB Europe, which is based in the International Financial Services Centre in Dublin.

The Department of Finance referred questions to the Central Bank.